Gleeson expects rapid recovery if improvement goes on
URBAN REGENERATION housebuilder MJ Gleeson said that if the current market improvement continues, the group is confident it will see a rapid recovery this year.
The Sheffield-based firm said house sales fell 30 per cent to 1,072 homes in the year to June 30, down from 1,529 the previous year.
However, it said it has entered the new financial year in a strong position with a forward order book of £145m on 1,033 plots, up from £88m on 677 plots in June 2019.
Daily reservations over the last four weeks have risen to over 80 per cent of pre Covid-19 levels, with the majority reserved at prices higher than in January and February 2020.
Gleeson said that the current safe working protocols are having an impact on productivity and build rate. Build activity on sites is currently running at 60 per cent of pre Covid-19 levels and is expected to reach 80 per cent by September.
The firm said the majority of furloughed staff have returned to work, either to sites or working from home, and the voluntary management pay cuts introduced in April were reversed on July 1. No further use of the furlough scheme is anticipated after July.
The board said it expects annual results to be in line with revised market expectations.
James Thomson, chief executive, said: “The impact of Covid-19 on the 2020 results is as expected. What is pleasing is that the business has demonstrated its underlying resilience in the face of enormous challenges and we are starting the new financial year in a strong position.
“Gleeson Strategic Land’s pipeline is strong and housebuilders are returning to the market to acquire much-needed consented land which remains in short supply.
“Buying a high-quality, affordable Gleeson home remains substantially cheaper than renting – often poor quality – accommodation. With strong demand and reservation levels expected to soon recover to pre Covid-19 levels, our robust pipeline will enable us to open more sites than ever as we continue to deliver on our strategic plan of completing 2,000 homes a year in 2022.”
Following the update, analyst Charlie Campbell at Liberum said: “Gleeson remains one of our favourite housebuilders as we are convinced that its strong exposure to first-time buyers (80 per cent) and low price points will prove the most resilient parts of the housing market.”