Homebuilder Cairn Sees Revenues Falls 58% But Sales Interest ‘Picking Up’

First-half revenues at homebuilder Cairn Homes dropped 58% compared to the first six months of 2019 due to coronavirus-related disruption at its construction sites.

The company closed 207 new home sales between January and June, down from 390 in H1 last year, with revenues falling from €192.4m to €80.6m. Cairn’s profit margin was reduced from 18.6% to 16%, with profits down nearly 80% year-on-year from €27.3m to €5.6m.

‘Assuming no further site closures occur relating to COVID-19, Cairn would expect that this negative impact on gross margin will not sustain into future periods,’ Cairn said in a trading update.

Cairn Homes reopened its building sites in mid-May. Pic: Shutterstock

Conversely, the average selling price of Cairn Homes starter homes rose slightly from €321,000 to €322,000, which the company described as ‘a price level where first time buyers can get access to mortgage finance’.

The company said productivity on its building sites is at 80% of pre-COVID-19 levels, with 15 sites reopening in mid-May after being closed for more than six weeks under government restrictions.

‘COVID-19 is impacting gross and operating margins as the business incurs additional costs associated with lockdown and social distancing, impacting site preliminary and management costs, reducing operating efficiency and extending construction programmes,’ Cairn added.

Cairn Homes CEO Michael Stanley said sakes interest has picked up post-lockdown. Pic: Sam Boal/Rollingnews.ie

Cairn said its has a gross cash position of €155m and net debt of €187m, with an additional €955m in inventories, consisting of €695m in land for development and €260m of ongoing construction work.

The homebuilder had 970 homes for sales in its pipeline, an increase of more than 100 from when building sites reopened, although around 300 sales are not expected to close until early next year due to COVID-19.

‘Further sales launches are scheduled over the remainder of the summer and into early autumn, having been postponed from spring,’ Cairn said, confirming that sales prices are broadly in line with pre-COVID-19 levels.

The company said productivity is now at 80% of COVID-19 levels. Pic: Shutterstock

Cairn CEO Michael Stanley said sales interest had ‘picked up appreciably’ in recent months and that the company’s financial strength and liquidity would enable it to meet market demand in the coming years.

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