MJ Gleeson half-year: revenue up, profits down – what’s really going on
MJ Gleeson has posted a classic mixed bag for the six months to 31 December 2025. Top line grew nicely as Gleeson Homes sold more units at slightly higher prices, but profit fell as margins and overheads bit and interest costs rose. Management sounds cautiously upbeat on early Spring trading, yet makes it crystal clear that a strong selling season is essential to meet full-year expectations.
If you want the short version: volumes and the order book are heading the right way, but the profit engine is running against a headwind of costs, incentives and a softer bulk investor market.
Key numbers at a glance
| Metric | H1 25/26 | H1 24/25 | Change |
|---|---|---|---|
| Revenue | £173.1m | £157.9m | +9.6% |
| Underlying operating profit | £4.2m | £5.1m | -17.6% |
| Profit before tax – underlying | £2.0m | £3.6m | -44.4% |
| Profit before tax – reported | £1.7m | £3.6m | -52.8% |
| EPS – basic | 2.22p | 4.80p | -53.8% |
| EPS – pre-exceptional | 2.65p | 4.80p | -44.8% |
| Dividend per share | 4.0p | 4.0p | Unchanged |
| Net debt | £22.5m | £18.1m | £4.4m higher |
| ROCE | 7.6% | 8.0% | -40 bps |
| Homes sold | 848 | 801 | +5.9% |
| Average selling price | £198,800 | £193,900 | +2.5% (underlying +1.7%) |
| Gross margin on home sales | 19.8% | 20.6% | -80 bps |
| Forward order book | 978 plots | 597 plots | +64% |
Gleeson Homes: more volumes, stronger order book, tighter margins
Gleeson Homes sold 848 homes, up 5.9%, and lifted the average selling price to £198,800. Underlying prices rose 1.7%, but incentives stayed elevated at around 4.5% and build-cost inflation of 2.6% – mainly labour – outpaced net pricing. That is why gross margin on home sales slipped to 19.8% and operating profit for the division fell to £7.0 million.
Open-market demand showed a flicker of life into the new year: net reservations per site per week were 0.55 in the five weeks to 6 February 2026, up 38% on the prior three months, although still below the same period last year. The forward order book looks healthy at 978 plots, a 64% jump on December 2024, helped by three new partnership agreements.
- Reservation rate H1: 0.75 per site per week (0.48 excluding multi-unit orders).
- Partnerships: first homes delivered, eight agreements now in place with five partners.
- Multi-unit investors: 190 homes sold, down from 205 – and the bulk investor market has softened.
- Part-exchange launched, with stock capped at £7.5 million to keep balance sheet risk in check.
Project Transform – the ongoing operational reshuffle – is designed to streamline the business and lower overheads. This phase is expected to deliver annualised savings of £1.1 million, but it will come with second-half exceptional costs of up to £4.5 million, including up to £3.0 million of non-cash impairments on certain land assets in Greater Manchester & Merseyside. Necessary housekeeping, in my view, but it will add noise to H2 numbers.
Gleeson Land: busier planning pipeline, modest loss narrows
The land arm completed three sales, lifting revenue to £4.5 million. Operating loss narrowed to £0.6 million as overheads rose to support growth. Planning was frantic: applications went in on 15 sites – a record – and permissions were secured on five sites anticipated to sell in FY2026. One of those sites, representing about 50% of the total plots expected to be sold this year, hinges on agreeing a final highways design.
- Portfolio now 77 sites with potential for 19,691 plots.
- Three sites actively progressed for sale totalling 1,016 plots and two more marketed at 282 plots.
- Five promotion agreements expected to complete in H2.
Why it matters: Gleeson Land can be a useful profit and cash contributor, but timing is lumpy. The record planning activity is encouraging for FY2026 and beyond, while the highways design dependency introduces near-term timing risk investors should keep in mind.
Cash, balance sheet and dividend: capacity intact, costs higher
Net debt rose to £22.5 million as inventories increased ahead of the Spring selling season and nine new build sites opened. The £135 million facility has £111.0 million of headroom, so liquidity looks comfortable. The interest line stepped up to £2.27 million from £1.54 million, reflecting higher average borrowings.
The interim dividend is maintained at 4.0p per share. Basic EPS for the half was 2.22p and pre-exceptional EPS was 2.65p. Net assets per share are 522.2 pence and ROCE sits at 7.6%.
Outlook: Spring must deliver
Management says current market expectations for FY2026 remain achievable, but they are explicit that a strong Spring selling season is fundamental. Early signs are “cautiously encouraging” on open-market demand, yet the bulk investor market has softened and margins are under pressure as net selling price growth lags build costs. Regulatory and tax headwinds add to the squeeze, and guidance will be updated in April 2026 when there is more trading visibility.
On balance, the setup is improving at the front of the funnel – reservations and order book – but translating that into profit requires discipline on incentives, build costs and site efficiency.
What I’ll be watching next
- Weekly net reservations and cancellation rates through Spring – the key swing factor for FY2026.
- Gross margin trend versus incentives and labour inflation – can 19.8% stabilise or recover in H2.
- Conversion of partnerships into completions and cash – the capital-light model should lift returns.
- Timing of the Land sale tied to highways design – a binary influence on second-half profit.
- Net debt trajectory by year-end – inventory unwind versus investment in new sites.
- Exceptional charges from Project Transform – cash versus non-cash split and realised overhead savings.
My take: resilient top line, pressured bottom line, option value in Land
This is a solid operational performance in a subdued market. Volume growth, a 64% bigger order book and record planning activity at Gleeson Land support the medium-term story. The dividend is held and liquidity is ample.
The negatives are clear: underlying PBT almost halved, homebuilding margins tightened, admin costs rose and net debt increased into the selling season. The bulk investor market weakening puts more weight on private buyers, who still need confidence to firm up.
Overall, if Spring momentum builds and partnerships scale, Gleeson can grind margins higher from here. If not, FY2026 risks sitting at the low end of expectations with further pressure from costs. For patient investors, the combination of affordable homes demand, a strengthened operating structure and a growing land pipeline still looks interesting – but the next 8–12 weeks are pivotal.
