Gleeson to cut 50 jobs as profit tumbles

Housebuilder MJ Gleeson is set to cut around 50 jobs after its pre-tax profit plummeted by a third.

The company plans to reduce its 800-strong workforce by around 5 per cent in a reorganisation of its housebuilding arm.

The restructure will see the three existing divisions of Gleeson Homes, which oversee nine regional offices, replaced by two divisions with just three regional offices each.

The move is expected to deliver annual savings of £4m after a one-off cost of £2m, it said.

Other “defensive measures” planned by the company include slowing build rates on certain sites in line with demand, delaying the opening of new sites, freezing recruitment and “maintaining strong discipline on land-buying”.

Gleeson Land, which is responsible for identifying development opportunities for the company, is unaffected by the reorganisation.

Chief executive Graham Prothero, who took on the role at the start of the year, said the reorganisation will ensure Gleeson’s housebuilding arm was “strongly positioned” for sustainable growth as market demand recovered.

“I want to ensure that the group is in the best possible shape to take advantage of the recovery which we are beginning to see early signs of,” he said.

“Building on the strong platform I have inherited, my focus is on optimising our organisational structure and making us more operationally efficient and fit for further growth.”

The measures were announced as the company’s half-year results to December 2022 showed pre-tax profit of £16.1m, down from £24.7m in the six months to December 2021.

Prothero said the results reflected the challenges posed by the macroeconomic environment in the period, in particular during the last three months of 2022.

“Market volatility and the sharp increase in interest rates following the disastrous mini-budget reduced affordability and severely impacted buyer confidence, causing a significant slowdown in demand,” he said.

“Meanwhile, supply chain and inflationary pressures exacerbated by the war in Ukraine continue to put pressure on costs, although we are seeing some welcome mitigation in subcontract rates and certain material prices.”

He said confidence, underpinned by improved mortgage rates, was slowly returning to the market, evidenced by improving net reservations.

At the end of last year, Gleeson announced the appointment of Guy Gusterson to head its land division as part of a shake-up in the company’s senior ranks.