McInerney revenues halve to €300m as downturn hits first-time buyers

WEAK DEMAND, falling land values and restructuring costs pushed house-builder McInerney Holdings into the red last year.

The company reported yesterday that revenues in 2008 halved to €300.9 million as the credit crunch squeezed first-time buyers, a key constituency for McInerney, out of the market.

The group ended the year with operating losses of €28 million and a pretax shortfall of almost €47 million. When exceptional items are included, operating losses hit €187.5 million and its pretax losses were €206.5 million.

In 2007, the group’s operations in Ireland and Britain earned it profits of €76 million and it had a pretax surplus for the year of €58 million.

The group was forced to write down the value of its assets by €82.5 million last year, and took a further €39.7 million hit on good will writedowns.

It also spent €9.8 million on restructuring, which involved office closures and job losses. Chief executive Barry O'Connor told The Irish Timesthat this will deliver savings of €45 million a year.

He added that the company had taken the action that it needed to deal with the impact of the recession on its business.

Mr O’Connor said the British government’s efforts to stimulate its economy had a positive impact in the first 10 weeks of this year. “We’re selling mainly to owner-occupiers; we sold 105 houses in the first 10 weeks, and we sold them at good prices.”

In the Republic, Mr O’Connor pointed out that people are waiting to see what the emergency budget will produce next month before making any decision.

Company chairman Ned Sullivan said Irish and British government initiatives, combined with low interest rates, should have a positive impact in the medium term on housing demand. “Notwithstanding this, continued negative economic growth forecasts are being predicted for 2009 . . . this will continue to impact the group’s operating activities.