McInerney falls 21% on housing figures

Shares in McInerney dropped by 21 per cent yesterday after the homebuilder said it had built 105 fewer houses than investors had expected in the first half.

The company also said it expected to build at least 20 per cent fewer houses this year than it had previously predicted.

Managing director Barry O'Connor said McInerney completed 257 homes in the Republic in the six months to the end of June, compared with 362 in the same period last year. For the full year, it expected to complete somewhere between 700 and 750, compared with the original target of 950.

Profit from the Irish homes division increased by 14 per cent to €12.2 million in the first half, but Mr O'Connor said he expected it to decline in the full year.

Despite the negative housing figures, Mr O'Connor was upbeat, saying 2007 was a year of transition for the company as it focused on expanding its UK business. He said there was unlimited growth potential in the UK, where the group had performed strongly in the period.

McInerney completed 446 homes in the UK in the first half, compared with 268 in the same period last year. Private housing profits from the division doubled to €3.6 million.

For the full year, Mr O'Connor is predicting that the group will complete 1,500 homes in the UK, an increase of 50 per cent on the previous year. He said he would like to get the figure above 2,000.

Analysts, however, were not so positive. Peter Gunn at Goodbody said he could find nothing comforting in the results and said the talk of a positive UK market was not enough to offset the negative Irish sentiment.

He described the Irish numbers as a "massive disappointment" and said the slowdown had been even more dramatic than anybody had forecast.

Mr Gunn said that, at current levels, the stock looked like good value, but he did not see a catalyst for a turnaround in the price in the near future.

The shares closed down 39 cent at €1.43 yesterday and are trading almost 50 per cent below where they were trading following the stock split in May.

Across the entire group, pretax profit fell 18 per cent to €9.2 million in the six months to the end of June, while revenue was down 4.1 per cent at €238.2 million.

Diluted earnings per share fell 23 per cent to 4.02 cent. McInerney will pay an interim dividend of three cent.

Mr O'Connor said the growth potential for McInerney was in the UK for the time being, but he believed that, within 18 months, the growth potential would be in the Republic too.