MJ Gleeson reports surging profits despite Brexit uncertainty hitting construction firms

Housebuilder MJ Gleeson’s shares rose 4.86 per cent this morning as it announced soaring profits and “no signs of customer caution” despite no sign of a Brexit deal as the deadline to leave the EU looms.

The FTSE small cap-listed firm beat analyst expectations and continued to defy the fate of its contemporaries, who have been hit hard by waning customer appetite for construction in recent months.

Read more: MJ Gleeson beats housing market blues

The figures

Profit before tax was £22.3m, up 62.8 per cent year-on year for the six months ending 31 December from £13.7m. Revenues also shot up to £118.3m, rising 52.8 per cent from £77.4m last year.

Cash flow was £27.8m, up 4.1 per cent from £26.7m, while earnings per share were 33.2p, up 61.2 per cent on 20.6p in the same period of 2017. Dividend per share was 11.5p, up 27.8 per cent from 9p the year before.

The housebuilder sold 691 homes in the second half of 2018, up 16.5 per cent from 593 last year, at an average price of £127,400, again ticking up 2.4 per cent from £124,400 the year previous.

Why it's interesting

For most housebuilders recent months have been bleak, as Brexit looms and the uncertainty that comes with it bites. But not for MJ Gleeson, which beat analyst expectations on profit-before-tax by 11 per cent.

This is likely to have been driven in part by a booming third quarter for building firms last year, in which output rocketed by 2.1 per cent, before housebuilders as a whole saw new work plummeting 6.8 per cent month-on-month in December.

In a research note, analysts at Liberum said: “Management expects full year profits at least in line with expectations and we leave profit before tax estimates unchanged. However, with seven strategic sites being marketed and a very strong order book in its homes business, we are very confident in our second half expectations.”

What MJ Gleeson said

Dermot Gleeson, chairman of MJ Gleeson, said: “The Group has once again delivered an excellent performance, increasing operating profit in both divisions.

“We see no signs of customer caution and demand remains robust.

Read more: Profit slips at housebuilder Crest Nicholson with London market blamed

“Against this background, the Board is confident that the Group will deliver a result for the full year at least in line with expectations.”