McInerney upbeat on future as profits rise 38%

Building group McInerney has beaten market expectations by posting a 38 per cent jump in profits for 2003.

The company, which mostly sells houses to first-time buyers, has also signalled further strong growth for this year, with forward sales well ahead of last year's levels.

McInerney made pre-tax profits of €28.5 million in the year to December 31st last, up from €20.6 million in 2002.

The performance, driven by continued strong demand for houses in the Republic and the UK, came as turnover rose by one-third to €343 million.

Looking to this year, chief executive Mr O'Connor said there was "very strong momentum in the numbers".

McInerney built 1,481 houses last year, up 28 per cent on 2002. It held deposits on 978 properties as the year closed, compared to 726 at the same point of 2002.

The Republic accounts for the bulk of McInerney's business, although Mr O'Connor said he hoped to expand operations in the UK this year.

Irish house-building contributed 55 per cent of the company's profits in 2003, with volume growth cancelling out some slippage in margins. Mr O'Connor said forward sales for the year to date in the Republic were already at 80 per cent of last year's total.

He is sceptical of suggestions that supply in the Irish housing market could soon outstrip demand, believing that as many as half of residential properties being built could be destined not for permanent occupation but for uses such as holiday homes or student residences.

In the UK, where the company also concentrates on first-time buyer business, Mr O'Connor plans to increase profits by expanding housing operations from the Manchester/Liverpool corridor to Newcastle and Leeds.

McInerney is also moving to step up its presence within the commercial property market in west London.

Turnover within the company's Irish contracting division, which returned to profitability last year, rose by 7 per cent to €31.1 million over the period.

Mr O'Connor said Spain, where profits fell last year, was a "longer-term" prospect.

The company will award a second-half dividend of six cents, thus lifting the full-year dividend to 11 cents.

Mr O'Connor confirmed that Derry-based construction firm Taggart Holdings made takeover overtures to McInerney last month, but he dismissed the advances as insubstantial.

"We received a brief one-page letter. It didn't constitute a formal approach," he said.

He did not expand on the content of the letter but it is believed to have come from an adviser to Taggart, which is a smaller, private firm.

Shares in McInerney attracted some profit takers yesterday, falling five cents to €5.25.