Previously flagged margin headwinds within Gleeson Homes have been worse than anticipated. Whilst the market is gradually recovering, volumes and pricing have not been strong enough to offset the impact. A planned land sale within Homes was anticipated to benefit FY25 but this now won’t proceed. Gross margins in Homes are therefore expected to be c.1% lower vs. previous expectations, reducing our FY25 PBT forecast by 15%. Planning delays during H2’25 have also impacted the pace of site openings. As a result, Gleeson will sell from fewer sales sites than previously expected in FY26. In outer years, the impact of this and persisting margin headwinds reduces our PBT forecasts by 20%/19% in FY26/FY27. Whilst today’s update is a stumbling block, we remain optimistic about the substantial medium term growth potential within Gleeson. We stay at Buy with a 617p target price (reduced from 804p).
