Cairn Homes reports strong momentum in ‘challenging environment’

A construction worker lays a row of bricks on a Cairn Homes construction site in Dublin. Photo: Bloomberg

Caoimhe Gordon

Ireland’s largest housebuilder recorded a strong performance in the first half of 2022 despite a “challenging environment” but warned that rising material costs have stretched the affordability gap for homebuyers in Ireland.

Cairn Homes generated core revenue of €240m for the first half of the year, closing 547 new home sales. This marked an increase from the first half of 2021 which saw the company close 403 home sales, with revenues of €131m.

Cairns noted that momentum had picked up since the end of the second construction lockdown last May, with Cairn closing 1,264 home sales in the past year.

In 2021, the company closed 1,120 new home sales overall.

Cairn also reported over 750 new homes agreed for sale with a net sales value of more than €295m in the first half of the year, its strong ever first half sales period. According to the company, this represented a sales rate per active selling scheme of 4.6 new homes per week.

Cairn Homes also expects to maintain its gross margin guidance of 21.5pc for the year, an increase from around 20.3pc in the latter half of 2021.

Currently, Cairn Homes has commenced five new sites in Dublin, Kildare, Meath and Limerick so far this year and are now active on 20 development sites across Ireland.

The Board also intends to announce a €20m dividend when the interim results are published in September.

The company said that while material costs are on the rise, this is currently being offset by improving product mix, operational efficiencies, as well as stronger pricing.

However, chief executive Michael Stanley said that increased build costs is impacting who can purchase homes. The company expects total build cost inflation for the year to be around 6pc – 7pc, which is an additional €15,000 to €17,000 per unit across infrastructure, labour and materials.

“The standard and quality of new homes being built in Ireland today is appropriately high. However, rising material costs have further stretched the affordability gap for the current generation of homebuyers,” he said.

“In the present environment, new homes output would materially reduce without the sensible Government interventions for first time buyers, including the First Homes initiative and Croí Cónaithe.”

Cairn Homes reported that its sales were supported by a growing mortgage market, with over 29,000 first time buyer mortgages approved in the year to May 2022. This marked a 8.6pc rise compared to the year prior.

The company reported that its outlook for the year remains unchanged, with turnover of €600m and 1,500 closed new home sales expected.

“Our current performance and profitability in a challenging environment has allowed us to commence a significant number of new developments. Today, we are building in 20 separate locations nationally with 1,750 closed and forward sold new homes across these developments,” said Mr Stanley.

Goodbody analyst Shane Carberry said the orderbook increased “significantly” in the period, already up to 1,750 from the 1,600 from the company’s last update in May.

"We believe it is best positioned to take advantage of the fragmented and undersupplied Irish housing market as the Group continues to progress towards its medium-term volume, margin and returns targets,” he said.

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