Shares in MJ Gleeson (LSE:GLE) dropped 21% on Tuesday after the housebuilder warned that operating profit for the year to June 2025 would fall up to 20% short of expectations, dealing a blow to hopes of a stronger housing market recovery.
The company said profit margins at its Gleeson Homes division had been hit by a combination of rising build costs, flat sale prices, increased use of buyer incentives and several bulk sales. As a result, gross margins will be around 1 percentage point lower than previously guided.
Adding to the pressure, a planned sale of land in East Yorkshire, which had been factored into forecasts, will no longer go ahead.
Excluding this disposal, Gleeson Homes expects to report operating profit between 15% and 20% below market expectations.
The company also warned that into the next financial year it would be selling homes from fewer sites than expected, due to planning delays. Gross margins for 2026 are also expected to miss current forecasts by about 1 percentage point.
Gleeson Land, the company’s land promotion arm, has completed three transactions this year and is working on seven more it hopes to finalise before the end of June.
The stock fell 110p to 406p.