Gleeson’s housebuilding CEO departs after margins fail to improve

Gleeson has warned its pre-tax profit next year will be at the ‘lower end’ of market expectations as it restructured the leadership and organisation of its housebuilding division.

The firm today announced Mark Knight, chief executive of £156m-turnover Gleeson Homes, has departed after a “comprehensive review” of the business recommended management changes.

The firm said its gross margin had come under pressure through the year to 30 June due to “a number of headwinds”, including increased build costs, flat selling prices, the cost of bulk sale transactions, planning delays and the “absence of an anticipated wider market recovery”

It said this meant an expected improvement in margins in the second half of the year did not materialise. Gleeson last month warned its gross margin for the year would be 1% lower than expected.

Meanwhile, a review of the business, called Project Transform, identified the need to implement organisational and management changes and these will be concluded within weeks. The review was launched after cost overruns were discovered due to issues around process and compliance with procedures.

Gleeson announced that Simon Topliss, previously finance director, will move into a newly created chief operating officer role with responsibility for central functions, performance and governance. He will report into Gleeson’s overall chief executive Graham Prothero.

The group’s six regions will be retained but will sit within two divisions, central and northern. The central division will be run by Scott Stothard, who is joining the business from rival housebuilder Vistry, while the northern division will be run by Andy Davies, who currently runs the north east arm. Both Davies and Stothard will report direct to Prothero.

In today’s short trading update, which covers the year to 30 June, Gleeson said its profit before tax and exceptional items for the year to 30 June to be within market expectations of between £21m to £22.5m.

It said however it expects pre-tax profit for the following year to be around £24.5m, which is at the lower end of market expectations.

>>See also: Gleeson ‘not trying to be Vistry’, says CEO as housebuilder increases partnerships work

Gleeson Homes sold 1,793 homes in the year, which is similar to the 1,772 sold the previous year, although its multi-unit sales have dropped from 346 to 205.

Net reservation rates over the last six months averaged 0.88 per site per week, up from 0.63 the same period last year.

Prothero said: “This was a challenging year for Gleeson. As well as external factors, it had become clear that our commercial delivery was not where we needed it to be. We have therefore been implementing at pace management changes which will significantly benefit the business through FY2026 and beyond.

“Whie we do not expect any significant economic recovery in the short-term, we are maintaining a robust sales rate. This, along with our remedial actions, gives me confidence that we have a stronger business which will deliver our projections for the current year and our significant growth plans over the medium-term.”