Strong performances in Gleeson's property and housing markets outweigh a disappointing year in construction division.
Gleeson has more than doubled its pre-tax profit to £17.6m for the year ended 30 June 2004 despite a fall in profits in the construction services division, its biggest sector.
Turnover for the group rose 3% to £645m and dividends increased 9% to 7.6p a share.
The construction, housebuilder and property group said that most of the profit was generated from its property division and said that housebuilding also had a strong year despite a slowdown in market conditions.
Gleeson Homes increased its operating profit to a record £12.3m, but it warned that the cooling housing market would hinder group profit growth in the current year. However, it said that there would be some “progress” as an increase in turnover was likely to outweigh any decline in operating profits.
Operating profit at the Gleeson’s biggest division construction services fell to £1.5m from £4.6m due to “unsatisfactory returns” in Gleeson’s Southern and Northern Building Divisions and the costs of withdrawing from contracting in Scotland. Last year’s operating margin was only 0.3%, though turnover for the division increased by 1% to £528.3m.
On a more positive note Gleeson said that sales of a number of development properties would make a “useful” contribution to Group profits in the current year.
Dermot Gleeson, Executive Chairman, stated 'The recent slow down in the housing market may well preclude a further significant uplift in profits in the current year.
“However, the Board remains convinced that the Group's strong presence and reputation in all of the markets in which it operates, coupled with its continued commitment to spreading risk, bodes well for the creation of shareholder value in the medium and longer term.”
Gleeson said its building divisions have a strong forward order book across the health, education, leisure, mixed commercial/retail and city centre residential sectors, and said it was well placed to take advantage of continued high levels of public sector spending.
However, it said that its divisions needed to be more selective when taking on new work, with an emphasis on securing long term framework agreements.
It also said that there was an “urgent need for substantial improvements in supply chain and design management.”