Revenues soar at Cairn Homes as market conditions remain strong

Listed housebuilder Cairn Homes has said the supply of new residential property in the Irish market will continue to undershoot demand significantly over the next two years.

In a trading update, the company said market conditions remain positive with continued strong demand for property during the latter part of 2017.

Cairn, which reported a sharp rise in full-year revenues to €149 million, from €40.9 million in 2016, said it was starting 2018 with a strong forward sales pipeline, with a net sales value of €134.3 million.

Estimated earnings before interest, tax, depreciation and amortisation (Ebitda) for 2017 is in the range of €14.5 million to €15 million, as against €3.8 million a year earlier.

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Goodbody analyst Eamonn Hughes said the full-year Ebitda guidance was slightly below its €16.3 million forecast, due to central overheads being a little higher than it had anticipated. Davy meanwhile had forecast Ebitda of €17.4 million.

418 home sales

“The previous guidance was for operating costs to fall in the range of 2 per cent to 2.5 per cent of revenues, but the second-half run rate would suggest a level above 3 per cent,” it said in a note to investors.

Cairn said it achieved €131 million in residential revenues last year with the average selling price for a property totalling €314,000 (ex-VAT).

During 2017, Cairn delivered completed sales across seven separate developments in the greater Dublin area. Included in the company’s 418 home sales last year were 24 units sold on non-core sites.

Cairn is currently building on three sites and expects further apartment commencements in prime Dublin city locations during 2018. The company also has a student apartment pipeline of 1,700 beds at five developments.

"Achieving 418 home sales is a very strong outcome in our second full trading year. We completed sales on seven separate developments during the year. Our practice of acquiring and building on larger scale developments, on average in excess of 400 units, allowed us to respond quickly to increased demand during 2017," said chief executive Michael Stanley.

“Given the quality and historical cost of our land bank, our dual focus on competitively priced houses and premium apartments and our increasing operational capability, we continue to look forward with confidence,” he added.

Cairn is due to publish its full-year results in early March.