MJ Gleeson shares fall 4% as FY26 outlook disappoints

Investing.com -- Shares of MJ Gleeson (LON:GLEG) dropped more than 4% on Friday after the housebuilder guided that profit for the current financial year would land at the lower end of expectations, despite delivering results for the year ended June 30, 2025, broadly in line with forecasts.

The company said it expects profit before tax and exceptional items of approximately £24.5 million for fiscal 2026, 6.5% below market consensus. Analysts at RBC Capital Markets noted that growth ambitions have again been deferred and flagged ongoing uncertainty around the company’s internal restructuring.

For fiscal 2025, Gleeson projects pre-tax profit between £21 million and £22.5 million, supported by slightly higher home sales and operational stability. 

Its core Gleeson Homes division completed the sale of 1,793 homes, marginally above the 1,772 sold the previous year, and is expected to deliver operating profit of around £23 million, in line with expectations. 

Reservation momentum improved in the second half, with net reservation rates averaging 0.88 per site per week, up from 0.63 a year ago. Excluding bulk sales, the figure rose to 0.64 from 0.50.

Despite this, the number of active sales sites declined to 57 from 62 amid persistent delays in the planning system, which also hampered the rollout of higher-margin developments. 

Gross margins came under pressure due to rising build costs, the ongoing use of sales incentives, and a higher share of bulk transactions. Additionally, unresolved issues at legacy sites continued to weigh on performance.

The company ended the year with 63 total sites, including 57 actively selling, and an order book of 845 plots, up from 559 last year. 

Thirteen new sites were launched during the year, though the group acknowledged that site openings remained below expectations.

As part of a broader response to operational shortcomings identified in mid-2024, Gleeson initiated a structural overhaul under its "Project Transform" programme. 

This led to the departure of Gleeson Homes CEO Mark Knight, while Scott Stothard, joining from Vistry, took charge of the Central division. 

Finance Director Simon Topliss was promoted to chief operating officer. The restructuring, which retains the company’s six regional units, will cost approximately £1.2 million, to be treated as an exceptional item.

Gleeson Land completed seven site disposals in FY2025, though three deals originally expected before year-end have slipped into the first half of FY2026.

The division anticipates operating profit between £7 million and £8.4 million, with performance expected to mirror last year. 

The land pipeline includes eight sites with planning approval or applications covering 1,343 plots, slightly down from 1,473 plots a year earlier.

Group net debt stood at £0.8 million as of June 30, reversing a net cash position of £12.9 million the previous year, primarily due to timing effects.

Gleeson said that housing market conditions remain subdued and said it sees no near-term catalyst for a material recovery.