Real Estate Executive MJ Gleeson makes leadership changes amid persistent low housing demand that negatively impacts profits
MJ Gleeson, a London-listed homebuilder, has announced a leadership overhaul for its homes business and revised its profit guidance for the fiscal year ending June 2026, citing increased build costs, subdued housing demand recovery, and planning delays as key factors.
The housing market remains subdued overall, with no short-term catalysts for significant improvement. Demand recovery is slower than anticipated, despite some localised price rises and moderate annual house price growth. Planning delays continue to restrict new site openings, further compressing company profitability and slowing the pace of new housing supply.
MJ Gleeson is taking organizational and management steps to address these challenges. The company has faced higher build costs and a slower-than-expected recovery in housing demand, leading to internal cost overruns, legacy site issues, and compliance failures. To improve build quality, cost control, and delivery pace, MJ Gleeson has reorganised into two divisions, with the Greater Manchester, and Merseyside and Cumbria regions being overseen by a single leadership team.
Mark Knight, Gleeson Homes chief executive, has resigned as part of the management overhaul. Fiona Goldsmith and Simon Topliss have been appointed as Gleeson's chair of the board and chief operating officer, respectively. These changes are expected to take time before positively impacting profits significantly.
In a challenging trading environment, analysts at Peel Hunt see potential for significant growth for MJ Gleeson over the medium and longer term. However, the company expects to recognize approximately £1.2million in exceptional cash costs from the reorganization.
MJ Gleeson's homes arm has suffered from multiple headwinds, including higher build costs, flatlining selling prices, and bulk sale transactions. For the year ending June 2025, the company expects to report profits of between £21million and £22.5million, compared to £24.8million in the previous 12 months.
The update on MJ Gleeson's performance has negatively affected shares of FTSE 100-listed rivals Barratt Redrow and Berkeley Group, as well as FTSE 250 Vistry, causing them to drop more than 2% and 3.5% respectively. MJ Gleeson shares have fallen 5.7% on Friday morning, making them the biggest faller in the FTSE All-Share Index and resulting in losses of around 31% over the past year.
Despite these challenges, MJ Gleeson's CEO, Prothero, expects the changes to benefit the business in the long term and deliver the company's projections for the current year and growth plans over the medium-term. The company remains optimistic about its future prospects, despite the current difficulties in the UK housing market.
- MJ Gleeson is actively investing in real-estate to address the challenges of increased build costs, subdued demand recovery, and planning delays, as indicated by their reorganization into two divisions.
- In a bid to improve build quality, cost control, and delivery pace, MJ Gleeson's decision to restructure its homes arm and appoint new leadership may have implications for the finance and business sectors, given the company's significant role in the housing market.
- Despite the current decline in the housing market and the challenges faced by MJ Gleeson, analysts still foresee potential growth for the company in the medium and long term, suggesting a strategic approach to investing in real-estate could prove beneficial amidst market fluctuations.
