NuGen Properties

New Gleeson chief adopts defensive strategy despite signs of recovery


Graham Prothero joined Gleeson as chief executive last month

Gleeson saw its pre-tax profits slide 35% in its half-year report on revenue down 1.4%.

New chief executive Graham Prothero said: “The group’s result for the first half of this financial year reflects the challenges posed by the macro-economic environment in the period, in particular during the second quarter.

“Market volatility and the sharp increase in interest rates following the disastrous mini-budget reduced affordability and severely impacted buyer confidence, causing a significant slowdown in demand.

“Meanwhile, supply chain and inflationary pressures exacerbated by the war in Ukraine continue to put pressure on costs, although we are seeing some welcome mitigation in subcontract rates and certain material prices.”

The economic fallout of the government’s mini-budget in September 2022 brought about the end of Liz Truss’ term in office as prime minister after just 49 days.

Former Galliford Try finance director and Vistry chief operating officer Graham Prothero joined Gleeson as chief executive on 1st January this year. He is already planning changes to the operating structure. Six management teams will operate nine operating regions following the merging of a number of operating teams. The existing three division structure will become two divisions, Northern and Central.

These actions are expected to incur a one-off cost of £2m in the next six months but save £4m a year.

Prothero has also implemented what he called “defensive measures” to protect working capital and control costs. These include slowing build rates on certain sites in line with demand, delaying the opening of new sites, maintaining discipline on land buying and freezing recruitment.

In the six months to 31st December 2022 – the first half of its 2023 financial year – MJ Gleeson saw its revenue decrease by 1.4% to £171.0m.  Profit before tax decreased 34.8% to £16.1m.

Within he house-building division, Gleeson Homes, revenue increased 11% to £166.7m, thanks to increased selling prices (up 15.6% to £186,400 on average) outweighing a fall in the number of homes sold (894 compared to 932 in the same period of the previous year).

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