Cairn Homes reports strong momentum in ‘challenging environment’
Ireland’s biggest homebuilder delivered a strong performance in the first half of 2022 despite a ‘challenging environment’ but warned rising material costs have widened the affordability gap for homebuyers in Ireland .
airn Homes generated base sales of €240 million in the first half, closing 547 new home sales. This is an increase from the first half of 2021, which saw the company complete 403 home sales, with revenue of 131 million euros.
Cairns noted that momentum has picked up since the end of the second construction lockdown last May, with Cairn having completed 1,264 home sales over the past year.
In 2021, the company closed 1,120 total new home sales.
Cairn also reported more than 750 new homes for sale with a net sale value of more than 295 million euros in the first half of the year, its strong first half sales period. According to the company, this represented a sales rate per active sales plan of 4.6 new homes per week.
Cairn Homes also expects to maintain its gross margin target of 21.5% for the year, an increase from around 20.3% in the second half of 2021.
Currently, Cairn Homes has opened five new sites in Dublin, Kildare, Meath and Limerick so far this year and is now active in 20 development sites across Ireland.
The board also intends to announce a dividend of 20 million euros when publishing the interim results in September.
The company said that while material costs are rising, this is currently being offset by improved product mix, operational efficiencies, as well as higher prices.
However, chief executive Michael Stanley said rising construction costs are impacting who can buy homes. The company expects total construction cost inflation for the year to be around 6-7%, or an additional €15,000-17,000 per unit for infrastructure, labor and the materials.
“The standard and quality of new homes being built in Ireland today are high enough. However, rising material costs have further widened the affordability gap for the current generation of homebuyers,” he said.
“In the current environment, the production of new homes would decline significantly without the government’s wise interventions for first-time buyers, including the First Homes initiative and Croí Cónaithe.”
Cairn Homes said its sales were supported by a growing mortgage market, with more than 29,000 first-time buyer mortgages approved in the year to May 2022. This marked an 8.6% increase from compared to the previous year.
The company said its outlook for the year remains unchanged, with revenue of 600 million euros and 1,500 new home sales expected.
“Our current performance and profitability in a difficult environment has enabled us to launch a significant number of new developments. Today, we are building in 20 distinct locations nationwide with 1,750 new homes closed and sold in these developments,” said Stanley.