Homebuilder Cairn Homes has reported lower revenues and profits for the six months to the end of June but said the underlying pent-up demand for home ownership has increased as a consequence of the Covid-19 lockdown.

Cairn Homes reported an operating profit of €5.8m for the six month period, down from €27.3m the same time last year.

It said that with a disciplined approach to cost and cash management, it maintained profitability despite production and sales constraints faced during and after two-month site closures. 

"This was a really difficult half year for our business, and indeed business in general due to the Coronavirus and shut-down," said Cairn Homes CEO Michael Stanley.

"We were closed for two months of the six months with no activity, no construction activity, so for Cairn Homes to generate albeit a modest profit of €5.8m for the first half of the year considering we were only active for two-thirds of that period is a fantastic result."

Its half year revenues came to €80.9m, down from €192.4m the same time last year. This included €69.7m in revenue from new homes sold. 

Cairn completed 207 sales in the half year at an average selling price of €337,000. This compares to 390 closed sales at an average selling price of €449,000 the same time last year. 

It noted that its starter home average selling price in the six month period was €322,000, little changed from €321,000 in the first half of 2019.

Mr Stanley said they expected pricing to remain strong as a miss-match between supply and demand remained.

"We’ve had an exceptional summer, that doesn’t surprise, the supply-demand imbalance is even more extreme in Ireland today," he said. "The number of new homes commencements has fallen by about 35% in H1, nationally there was only 9,000 units started so far this year - so we’re still in the midst of a housing crisis."

Construction productivity is now back to about 85% of pre-pandemic levels.

Cairn Homes said the supply of new homes into the Irish housing market is likely to be impacted in 2020 and into 2021 as the broader industry reacts to the pandemic, exacerbating the housing crisis. 

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Cairn has reopened all 15 active residential construction sites and said it continues to invest in site commencements which will deliver growth into 2021 and beyond. 

"The robust level of demand witnessed since lockdown was expected, particularly from first time buyers for our competitively priced starter homes, and our forward sales pipeline will be enhanced by the ongoing Autumn selling season, including three new sales launches scheduled in September and October 2020," the company said.

Despite the significant disruption to its construction and marketing activities in the first half of 2020, Cairn is guiding modestly in excess of 700 closed sales, a gross margin of about 16.3% and an operating profit of about €20m for the full year. 

"This guidance is presented on the assumption that our construction and sales activities can continue to operate in a safe manner for the remainder of the financial year," the company said. 

"While there remains some uncertainty given Covid-19 and the economic backdrop, we have a healthy level of contracted forward sales into 2021," it added.

Mr Stanley said the fact that Cairn was profitable in the first half, when its sites were closed for two months due to Covid-19, is testament to their flexibility and commitment to getting the job done to a continually high standard in a safe working environment. 

"I am not surprised by our sales momentum over the summer months which has carried through into the autumn selling season, with our current forward sales pipeline valued at €237m," Michael Stanley said. 

"The underlying pent-up demand for home ownership in Ireland has increased as a consequence of the lockdown. This experience has definitely changed people's priorities and owning their own space in a well-designed, energy efficient A-rated new home has become paramount to many," he said.

"Despite the lingering uncertainty surrounding Covid-19, we look forward with confidence given the scale and responsiveness of our platform, the quality of our new homes and the sustained interest of buyers," the CEO added.