Sunday 25 February 2018

Cairn Homes shares up as profits treble despite low sales

Pic shows Michael Stanley, Cairn Founder & CEO, Aileen OíDonoghue, Director of Strategy
Pic shows Michael Stanley, Cairn Founder & CEO, Aileen OíDonoghue, Director of Strategy

Donal O'Donovan and Colm Kelpie

Profits trebled at listed housebuilder Cairn Homes in the first six months of the year, though the business completed the sales of fewer than 100 new homes in the period.

Cairn's land bank is big enough to supply 12,700 units - houses and apartments - at sites mainly in and around Dublin, the company said.

Interim results yesterday show revenues increased by €25.2m to €41.2m in the six months to the end of June. Gross profit increased 191pc to €7.7m.

Shares rose just over 1pc to €1.74 each following the results.

Cairn Homes has raised €720m in equity since 2017 though an initial stock-market listing and subsequent rights issues, and has acquired a massive land bank of 33 sites, mainly in greater Dublin that have the capacity to supply 12,700 homes.

The company has also raised loans - including €50m from the taxpayer-backed Activate Capital to fund the acquisition of a high-profile site in Dublin 4 from RTE. The RTE site is big enough to build 500 high-end apartments.

To date, housing output by Cairn has lagged well behind the pace of its site acquisition. The company said it expects to sell "at least" 375 units in 2017.

In addition, Cairn said it has a pipeline of forward sales of 474 units - worth €188m - in place and that it is active on nine sites which will deliver in excess of 3,250 new homes. That is up from five sites where the builder was active at the start of the year.

Cairn Homes CEO and co-founder Michael Stanley said land hoarding by developers was not holding back the supply of homes.

He said he did not expect Cairn to be hit by a proposed tax on land-hoarding, saying the company has sold, and will sell, any land on which it does not plan to build.

"I don't genuinely believe that the challenge in the industry today is land-hoarding. I think most builders including ourselves want to get active and meet this demand that is blatantly there.

"And it doesn't mean that I have a comment on whether this [a proposed vacant site] tax is right or wrong, I just don't believe that is the constraint."

Mr Stanley said a "lumpy" pace of output was a result of the need to put in infrastructure on sites. "Therein lies the challenge for the industry. It takes time to scale a housebuilder, particularly if you want to do it right and you want to build great homes," he said.

Irish Independent

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