Cairn Homes Plc: Results for the Year Ended 31 December 2023

Results for the Year Ended 31 December 2023

Established and Scaled Platform With Significant Momentum

Dublin / London, 29 February 2024: Cairn Homes plc (“Cairn”, “the Company” or “the Group”) (Euronext Dublin: C5H / LSE: CRN) today announces its preliminary results for the year ended 31 December 2023.

Key Financial and Operational Highlights

• Cairn had its strongest ever financial and operational performance in 2023, delivering 1,741 sales completions (2022: 1,526) and generating revenues of €666.8 million (2022: €617.4 million).
• Demand for Cairn new homes remains exceptionally high as evidenced by our pipeline of closed and forward sales as at 28 February 2024 of 2,473 new homes (€946 million), an increase of nearly 1,000 new homes (+€400 million) in twelve months.
• A record second half of the year delivered 1,206 sales completions, total revenue of €447.3 million, gross margin of 22.6% and operating cash flow[4] of €194.8 million, underpinning and driving the Company’s growth into 2024.
• Construction work in progress (“WIP”) investment of €439.9 million in 2023, illustrating our ongoing investment in construction activities, with over 2,100 new home commencements (a 21% increase from 2022), and active across 20 sites nationwide.
• Progressed our first three forward fund transactions[5] which will deliver nearly 1,300 much needed Social & Affordable new homes. These transactions will enable Cairn, as Ireland’s largest self-build apartment developer, to further increase our delivery of apartments.
• Commenced our first 598 unit Passive House apartment scheme at Piper’s Square, Charlestown, which aligns to both our decarbonisation targets and our strategy of delivering the highest quality scaled apartment developments to State supported counterparties.
• Retained our A- Carbon Disclosure Project (“CDP”) score and improved our rating across nearly all key metrics, including scope 3 emissions and targets.
• Announced as the title sponsor of Ireland’s Community Games. Over 160,000 children participate annually in these games which will be renamed as Cairn Community Games.
• Completed €52.4 million of our €75 million share buyback programme and acquired 45.6 million shares, as at 28 February 2024. The Board is also proposing a final dividend of 3.2 cent, subject to shareholder approval at our AGM on 10 May 2024, for a total FY23 dividend of 6.3 cent per ordinary share.

Macroeconomic and Housing Backdrop

• Ireland entered 2024 with one of the strongest performing economies in the EU. Notwithstanding the current interest rate environment, there is a supportive macroeconomic backdrop with strong exchequer surpluses, falling inflation, record and near full employment, strong consumer spending and a growing population.
• Housing For All continues to target 300,000 new homes in Ireland by 2030, including 90,000 social and 54,000 affordable homes. This is supported by a general budget surplus of €8.4 billion forecast in 2024, with cumulative surpluses between 2023 – 2026 of over €46 billion forecast (source: Budget 2024). 
• The Irish Government has committed over €5 billion in funding for housing in 2024 - an acknowledgement of housing as Ireland’s number one societal issue and, more importantly, a commitment to an increasing role in solving this crisis. Ambitious housing targets are underpinned by impactful State supports for first time buyers in the private market and State supported counterparties in the Social & Affordable market.
• There continues to be a significant structural demand for new homes and despite the delivery of 32,695 new home completions in 2023, the highest since 2008, the Housing Commission estimates that c.42,000 – 62,000 new home completions are required per annum.

FY24 Outlook and Guidance

Cairn has continued our strong sales momentum with a closed and forward sales order book of 2,473 new homes with a net sales value of €946 million (as at 28 February 2024) illustrating the strong demand for our quality built and energy efficient new homes. This supports our FY24 outlook with the Company poised to deliver another year of exceptional growth in volumes, revenue and profitability. The Company expects to continue its strong medium and long-term cash generation and deliver our target of a 15% ROE in FY24, demonstrating our commitment to creating shareholder value and delivering strong returns.

With this growing level of confidence in our business, 2024 is expected to be another year of continued momentum and significant growth. The Company is positioned to grow our business by a further 30% in 2024 and from this strong base today re-confirms our FY24 guidance as follows:

• c.2,200 units[6];
• Operating profit of c.€145 million; and
• ROE of 15%. 

The Company remains committed to distributing surplus cash to shareholders and our significant cash generation in 2024 and beyond will continue to fund consistent shareholder returns. The Company has returned over c.€315 million to shareholders since 2019, (c.30% of market capitalisation as at 28 February 2024), through a combination of progressive ordinary dividends and share buyback programmes. The remaining €22.6 million in the FY23 share buyback programme is expected to complete in the coming months, at which point the Company will issue a further capital allocation update.

Commenting on the results, Michael Stanley, CEO, said:

“Our sustained positive momentum has carried through into 2024 and strong sales since the beginning of the year has seen our closed and forward order book growing further to 2,473 new homes. We continue to invest heavily in work in progress as we ramp up delivery across our 20 active construction sites. Cairn will deliver another year of strong growth in volumes, revenue and profitability.”

“Construction of homes for first time buyers is a core market for us, having delivered over 500 new starter homes at average competitive market prices of just under €400,000 last year.”

 “We are also now a well-established delivery partner for State-supported entities including the LDA, Approved Housing Bodies and Local Authorities, who urgently require delivery of new apartment developments situated close to multi-modal transport hubs, for social and affordable rental homes.”

“The State currently owns less than 10% of the 2.1 million residential homes in Ireland, a level which materially lags many European peers where State ownership is typically closer to 20%. Added to this, the private rental sector is insignificant in scale and uninvestable at present. Unaddressed, this material difference will result in other economies out-competing Ireland, as they are much better positioned to offer secure and affordable rental accommodation to their working population. The success of State owned or funded affordable rental supply solutions like Cost Rental (CREL) is now critical to addressing Ireland’s housing crisis today and into the future.” 

For further information, contact:

Cairn Homes plc                  +353 1 696 4600

Michael Stanley, Chief Executive Officer

Shane Doherty, Chief Financial Officer

Stephen Kane, Director of Corporate Finance & Investor Relations

Declan Murray, Head of Finance & Treasury

Ailbhe Molloy, Investor Relations Manager

Drury Communications                 +353 1 260 5000

Billy Murphy

Claire Fox

Morwenna Rice 

An analyst and investor call will be hosted by Michael Stanley, CEO, and Shane Doherty, CFO, today 29 February 2024 at 8.30am (GMT). Please use the numbers below, quoting the access code 579710:

Notes to Editors

Cairn Homes plc (“Cairn”) is an Irish homebuilder committed to building high-quality, competitively priced, sustainable new homes and communities in great locations. At Cairn, the homeowner is at the very centre of the design process. We strive to provide unparalleled customer service throughout each stage of the home-buying journey. A new Cairn home is expertly designed, with a focus on creating shared spaces and environments where communities thrive. Cairn owns a c. 16,300 unit landbank across 35 residential development sites, over 90% of which are located in the Greater Dublin Area (“GDA”) with excellent public transport and infrastructure links.

Note Regarding Forward-Looking Statements

Some statements in this announcement are, or may be deemed to be forward-looking with respect to the financial condition, results of operations, business, viability and future performance of Cairn Homes plc and certain plans and objectives of the Company. They represent our expectations for our business and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and projections about future events. We believe that our expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond our control, and which include, among other factors policy, brand, economic, financial, development, compliance, people and climate risks, our actual results or performance may differ materially from those expressed or implied by such forward-looking statements. Past performance cannot be relied upon as a guide to future performance and should not be taken as a representation that trends or activities underlying past performance will continue in the future. These forward-looking statements are made as of the date of this document. Cairn Homes plc expressly disclaims any obligation or undertaking to publicly update or revise these forward-looking statements, other than as required by applicable law.

CHIEF EXECUTIVE STATEMENT

IMPLEMENTATION OF STRATEGY

Cairn is a home and community builder, leading the market in creating sustainable foundations upon which Ireland can thrive. Cairn’s corporate objective is to deliver sustainable new homes, including houses, duplexes and apartments, to a broadening customer base. This is done at pace and scale whilst building communities that serve our country’s present and future needs. These new communities are delivered from a scalable operating platform, through established supply chain partnerships and on development sites across our historic low-cost c.16,300 unit landbank. This, in our view, is the most immediate, direct and delivery-focused way to make a real and meaningful impact on the Irish housing market.

Cairn’s historic approach to capital deployment, through a timely and well-executed land acquisition strategy together with the successful scaling of our business, has resulted in over 10,000 customers choosing a new Cairn home to date. These new homes are delivered on our current 35 site landbank which comprises suburban and commuter belt low-density housing sites (c.11,500 units at an average historic site cost of c.€24,000 per unit) and city centre, suburban and commuter belt high-density apartment sites (c.4,800 units at an average historic site cost of c.€66,000 per unit).

The Company is focused on sustainably building and investing in the capability and capacity of the three key components of our operating model – our people, our operating platform and our supply chain. This will enable us to execute our strategic priorities in these critical areas as well as supporting our ambitious growth strategy. It also sets us up for scale and optimises our product delivery through a combination of:

• The Strength of our Team: we continue to invest in our people and extend our capacity and capability. Our team continues to grow across all areas of our business.
• Better Ways to Build: our continuous improvement programme which focuses on digital construction, innovation, productivity and scaled efficiencies to drive operational excellence and maintain our competitive and market advantage.
• Apartment Delivery Expertise: as Ireland’s largest self-build apartment developer[7], we will continue to leverage the knowledge capture and experience from our proven scaled delivery capability with over 4,500 apartments delivered or under construction to date in areas of high employment.
• Regional Expansion: extending our development footprint beyond the Greater Dublin Area (“GDA”) with initial new site commencements in Cork, Limerick and Kilkenny. This will be followed by further potential expansion in other regional locations.

Our ambitious growth strategy allows us to respond to the continuing strong demand for new homes across all tenures and multiple routes to market, including: