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MJ Gleeson becomes the latest housebuilder to brush aside political and economic uncertainty

“Our twin track strategy - the development of low cost homes for open market sale in the North of England and strategic land sales in the South - delivered another excellent year of increased volumes, margins, profit and cash"

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The average selling price of a Gleeson home last year was £122,700

Affordable housebuilder MJ Gleeson PLC (LON:GLE) has become the latest in the sector to brush aside the economic and political uncertainty thrown up by Brexit and the recent snap election.

As Gleeson mentioned in a trading update earlier this summer, it sold 1,013 houses in the year to 30 June – a year-on-year increase of 12% (2016: 904).

The average selling price of those properties fell slightly to £122,700 (2016: £125,700) but total operating profits still jumped 13% to £160.4mln (2016: £142.1mln) thanks to eight land sales which boosted profits in the Strategic Land division.

Given the “strong performance”, Gleeson upped its total dividend by a whopping 66% to 24p (2016: 14.5p).

Northern property market challenging London

On a wider note, this post-Brexit recovery is indicative of something which for the past decade or so would’ve been unthinkable: the northern property market is giving the south a run for its money.

You only have to look at the recent house price data which shows slowing growth ‘down south’ and an acceleration in prices ‘up north’.

Target of 2,000 home sales a year by 2022

“Our twin track strategy - the development of low cost homes for open market sale in the North of England and strategic land sales in the South - delivered another excellent year of increased volumes, margins, profit and cash,” said chairman Dermot Gleeson.

“Gleeson Homes achieved its milestone target of 1,000 unit sales per annum and has set a new milestone target of 2,000 unit sales per annum within the next 5 years.

“Affordability remains very attractive and demand exceeds supply, with buyers queuing on site opening days.

“Gleeson Strategic Land also had a record year and continues to benefit from strong demand for consented land in prime locations from both medium sized and large housebuilders.”

Bright outlook

Chief executive Jolyon Harrison added that demand for Gleeson’s homes “continues to be strong” while there is also good demand from other housebuilders for its various plots of land.

“The uplift in dividend signals our confidence in continued cash generative growth.

“We are confident the current financial year will be another excellent year for the group.”

Shares gained 4.1% to trade at 653p in early deals on Monday morning.

Quick facts: MJ Gleeson

Price: 816 GBX

LSE:GLE
Market: LSE
Market Cap: £4.39 m
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