McInerney profits double

Irish housebuilder McInerney doubled pre-tax profit in the first half of 2004 on the back of a buoyant Irish housing market and growth in margins on business here and in the UK.

The company reported pre-tax profit of €17.03 million in the six months to the end of June compared with €8.53 million in the same period last year. Sales rose 14 per cent to €158.3 million.

McInerney built 723 units in the first half, up 27 per cent on 2003. Output in the Irish market was more impressive, growing 62 per cent to 574 units.

Chairman Mr Ned Sullivan said the company anticipated "another excellent full-year result".

"Our growth strategy is exceeding targets and is ahead of expectations," he said in a statement.

Analysts welcomed the results, which were significantly ahead of forecasts, and said they were likely to trigger a series of forecast upgrades.

"While a rather subdued performance in the first half of 2003 flatters the year-on-year comparisons," said Davy analyst Mr Flor O'Donoghue, "the results provide clear evidence that the group is in terrific shape."

Davy, which is the company's broker, has doubled its earnings forecasts for the full year which, if attained, would make McInerney the fastest growing housebuilder in Ireland and Britain, it says.

The listed property company also signalled a recovery in the light industrial sector. "We have seen a very strong pick-up in industrial demand in the past three or four months and there is nothing to suggest it will not continue," said managing director Mr Barry O'Connor.

However, he was disappointed with the performance of the group's leisure interests in Spain, where profits fell 80 per cent. Just 14 units were completed in the period compared with 65 in the same period last year and the first-half target of 68.

"We have had a tough enough time in Spain in the first half but the sales we fail to close this year will close next year," said Mr O'Connor.

He said the UK, where McInerney this year expanded significantly with the purchase of Alexander Developments in the north-east for up to €13 million, would be the main driver of growth in the years ahead.

"We see an almost unlimited opportunity in England," said Mr O'Connor, who expects profit margins in the UK to move closer to Irish levels in the mid-teens by the end of the year.

Mr O'Connor played down prospects of further UK acquisitions. "At the moment, we will achieve far more by growing organically than by buying," he said. The company plans to open offices in the north Midlands to complement its existing operation in the north-west and the north-east.