MJ Gleeson PLC on Thursday said profit halved in the first half of its financial year, amid weak demand in the UK housing market.

Sheffield, England-based Gleeson operates in two divisions - Gleeson Homes and Gleeson Land. Gleeson Homes is a builder of affordable housing. Gleeson Land identifies development opportunities and promotes land through the UK residential planning system.

Gleeson said pretax profit fell to £7.2 million in the six months that ended December 31 from £16.1 million a year before, as revenue fell by 11% to £151.5 million from £171.0 million. Revenue at Gleeson Land more than doubled to £9.2 million from £4.3 million, but it dropped by 15% at Gleeson Homes to £142.3 million from £166.7 million.

Gleeson also said it suffered margin pressure from increased sales incentives, extended site durations, and multi-unit sales. Gross margin at Gleeson Homes narrowed to 24.5% in the first half from 27.7% a year before.

‘This has been exacerbated by additional costs on a number of older sites, which were brought to light by new management teams put in place following the organisational restructuring implemented last year,’ explained Chief Executive Officer Graham Prothero.

‘We have substantially tightened and standardised our operating and reporting processes and cost disciplines.’

In response to weaker results, Gleeson cut its interim dividend by 20% to 4.0 pence from 5.0p.

More positively, Gleeson said it entered the second half of the year with a strong forward order book and signs of recovery in net reservation rates. These were 0.50 per outlet per week in the five weeks ended Friday last week, up from 0.46 a year before.

With UK mortgage rates coming off their late-2022 highs, the company said it expects full-year results to be in line with expectations.

Gleeson shares were down 0.2% at 499.00 pence in London on Thursday afternoon.

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