Wednesday 20 February 2019

Cairn boost as demand drives jump in profits

Overall, the Dublin-listed group sold 804 homes last year, almost double the 418 unit sales in 2017
Overall, the Dublin-listed group sold 804 homes last year, almost double the 418 unit sales in 2017
Ellie Donnelly

Ellie Donnelly

Figures from one of the country's largest developers, Cairn Homes, show the company performing ahead of analysts' estimations.

In a trading update yesterday, the group said it expects to report an operating profit of €53m in respect of 2018. This is a massive jump on the profit of €14.5m reported in 2017.

The full-year gross margin is expected to be approximately 20.5pc, ahead of the 20pc forecast by Davy Stockbrokers.

Meanwhile, the group - which has a number of developments including Mariavilla in Maynooth and Gandon Park in Lucan - sold 804 homes last year. Analysts had predicted a slightly lower figure of 800.

Demand is being driven by strong population growth and strengthening employment levels.

In addition, the company said affordability is being supported "by positive wage inflation and increasing competition amongst mortgage providers".

Colin Sheridan, analyst with Davy, said that "the run rate in volume and margin achieved gives us confidence in 2019 estimates".

"The potential for cash returns to shareholders is substantial in the short to medium-term as the company reduces the size of its land bank," Mr Sheridan added.

Total revenue for 2018 was around €337m, up from €149.5m in 2017. Excluding its non-core site sales, revenues from new homes sold were €294m.

The group had closing net debt of around €140m.

"2018 has seen Cairn double the number of quality homes built and sold to 804, boosting our revenues to circa €337m," Michael Stanley, co-founder and CEO of Cairn, said.

"Considering this was only our third full trading year, this performance illustrates the positioning and growing maturity of our business, the capability of our talented team and the depth of unsatisfied demand for new family homes in Ireland."

Overall, the Dublin-listed group sold 804 homes last year, almost double the 418 unit sales in 2017.

The company's average selling price in 2018 was €366,000 per housing unit.

Looking ahead and Cairn, which in December was given the go-ahead to build more than 450 new homes on the outskirts of Dublin, said it has a strong forward sales pipeline, with a sales value of €159.5m based on 344 units at an average selling price of €464,000.

It added that market conditions in Ireland remain positive, notwithstanding Brexit uncertainty, and that it believes the country requires a minimum of 35,000 new homes.

Shares in the company were up over 5pc in afternoon trading on the Irish Stock Exchange.

Cairn will announce its results for 2018 in March.

Irish Independent

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