Cairn Homes has upgraded its full-year earnings forecast and expanded a share buyback programme after reporting on Thursday that its current book of closed and forward orders from customers has a net sales value of more than €1 billion.
The Dublin-based group said that it closed 535 sales in the first half of the year across 10 residential developments, down from 547 for the same period in 2022.
Revenues declined 9 per cent to €217.3 million, as the average selling price dropped 7.5 per cent to €406,000, as there were no sales this year of multifamily units, which had driven average prices in 2022. Operating profit for the period declined by 18 per cent to €29.6 million.
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Cairn said that it is now on track to sell more than 1,800 new homes this year, up 18 per cent on 2022 and heavily weighted to the second half of the year. The target is ahead of its previous guidance of sales of 1,750-1,800 and last year’s figure of 1,526.
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The company, led by chief executive Michael Stanley, raised its full-year operating profit forecast to €110 million-€115 million from €105 million-€110 million.
It now has a close and forward sale order book for 2,730 homes, up 37 per cent on the year, that has a net sales value of €1.01 billion. The order book has grown by 500 units since the company issued a trading update in July.
“Total housing output in Ireland is likely to remain unchanged at circa 30,000. Against this backdrop, we are pleased to be increasing our year-on-year delivery by nearly 20 per cent,” said Mr Stanley.
The Housing Commission, established under the programme for Government to examine housing policy issues, estimates that the State may need between 42,000 and 62,000 new homes every year until 2050 to meet demand.
Cairn launched sales last weekend in the first phase of a huge new development of 9,000 new homes at Seven Mills in Clonburris, Dublin 22.
“We will invest over €2 billion in constructing this new town in the coming years, providing homes for over 25,000 people in this exceptional location,” said the chief executive.
Further growth
Cairn said on Thursday that it has widened a share buyback programme originally announced in March by €35 million to bring it to €75 million. Total shareholder returns are on track to amount this year to €115 million-€120 million, including dividends.
“While housebuilders across developed nations downgrade guidance and hoard cash, Cairn Homes has once again delivered upgraded full-year guidance, further increased capital returns to shareholders and invested significantly in WIP [work in progress] to provide a platform for further growth,” said Goodbody Stockbrokers analyst Shane Carberry.
Mr Stanley said that rising building costs have added about €45,000 to the average price of delivering a new home since the start of 2021, though the rate of inflation has eased considerably this year.
He said that he is “reasonably confident” that a downturn in office development in Ireland will help restrain building materials and labour costs in the residential sector.
The chief executive that apartment building for the private rental sector remains “extremely challenging” with overseas inflows into this area having dried up in the past year amid rising interest rates and concerns among investors about the Republic being a “safe and consistent” place to invest in this area.
