MJ Gleeson profits surge amid 'robust' demand
By Michele Maatouk
Date: Thursday 14 Feb 2019
(Sharecast News) - Urban regeneration and land development company MJ Gleeson posted a 62.8% surge in first-half pre-tax profit on Thursday amid "robust" demand, as it hiked its dividend and sounded a confident note on the outlook.
In the six months to 31 December 2018, pre-tax profit increased to £22.3m from £13.7m the year before as revenue jumped 52.8% to £118.3m thanks to strong performances from both Gleeson Homes and Gleeson Strategic Land.
Unit sales were up 16.5% in the half to 691 units, while the average selling price was 2.4% higher at £127,400.
The company, which lifted its dividend per share by 27.8% to 11.5p, said it had an "excellent" start to the year and was on track to deliver results "at least in line" with expectations for the full year.
Chairman Dermot Gleeson said: "The group has once again delivered an excellent performance, increasing operating profit in both divisions. Gleeson Homes' growth plans remain on track.
"We see no signs of customer caution and demand remains robust.
"Land remains available at sensible prices in both existing and new geographic areas. The two pilot offices in Penrith, Cumbria and Ashington, Northumberland have become full area offices, increasing the number of area offices to ten.
"Gleeson Strategic Land completed the same number of site sales as in the first half of the prior year, but the sites sold were significantly larger this half.
"Demand for consented sites remains strong from both large and medium-sized developers."
At 1415 GMT, the shares were up 4.9% to 777.48p.
Berenberg, which rates the stock at 'buy', said Gleeson's differentiated strategy continues to pay dividends, with the interim results "considerably ahead" of last year's numbers and results for the full-year expected to be at least in line with current expectations.
"Demand for the group's product - low-cost homes for those on low incomes in the Midlands and north of England - remains strong and the group is seeing no signs of customer caution," the bank said.
"With limited competition for the group's target land, and affordability in its regions among the highest across the UK, we believe Gleeson is well placed to deliver its ambition of 2,000 units by 2020, a 15% volume compound annual growth rate."
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