McInerney on growth trail as profits double to £7m

McInerney Holdings, the house builder, is looking for further strong growth following the more than doubling of pre-tax profit from £3.35 million (€4.26 million) in 1997 to £7.07 million (€8.98 million) in 1998. The results are somewhat better than brokers' predictions.

The figures include an exceptional profit of £1.09 million from land sales. However, even if this is excluded, the company still pushed profit up by 79 per cent.

McInerney completed 582 housing units in 1998, up from 486 in 1997. The average price was £82,000 excluding VAT (£92,000 with VAT), up from £76,000 in 1997.

While trading was very buoyant, the group detected "an easing in the general level of house price inflation in the last quarter". Nevertheless, it is continuing to experience "very strong levels of demand".

The numbers are expected to be boosted to 650 units in 1999. And as it gains benefits from this year's fund raising, a "significant increase" on that is contemplated for 2000.

Noting that the economy should continue very buoyant, though at a lower level than in 1998, the chairman, Mr Bob Ferris, said it should lead to a "strong demand for residential and commercial property". Also the group intends to increase its level of activity in the housing building market, "mainly through geographic expansion".

This, said the managing director, Mr Barry O'Connor, will be in areas such as Galway. And it intends to further develop its commercial property business and "to continue to explore acquisition opportunities".

Sales grew by 22.6 per cent to £63.7 million (€80.9 million). The profit margin (excluding the exceptional profit) widened from 6.4 per cent to 9.4 per cent. Reflecting real growth, basic earnings per share grew from 10.14p to 17.00p. Private housing accounts for the lion's share of both sales and profits. Sales in this area grew from £37.3 million to £47.9 million, while profit before interest and tax went up from £4.0 million to £6.0 million. Mr O'Connor attributed 35 per cent of the growth in profit to higher margins and 65 per cent to increased units.

The group regards the second Bacon review of housing as a positive development, saying its recommendations "focus on ways to accelerate the introduction of suitable serviced land to the market". This is "vital" if the supply problems are to be resolved.

The contracts division saw a contraction in sales from £9.5 million to £8.5 million but profits jumped from £149,000 to £813,000 because the profits were back loaded. This area is to be developed further.

The leisure division saw sales falling from £3.1 million to £1.5 million, due to the changed policy of concentrating on rents, rather than sales. However, again reflecting the new policy, there was a rise in profits from £120,000 to £588,000. Mr Ferris said the group is particularly pleased with the turnaround of this division at Four Seasons Country Club, Marbella, Spain. Following the decision to concentrate on the rental market, it "achieved a good profit". There has been a strong level of rental bookings this year. And the construction of a new block of 12 apartments, started last autumn, is expected to be completed shortly.