The fate of the Irish residential property market rests on the next two months, according to estate agents Sherry FitzGerald, which, as expected, has reported a sharp fall in 2001 pre-tax profits.
Sales in April and May will show if strong first-quarter growth will be sustained or is just the release of pent-up demand from the final quarter of 2001.
Group pre-tax profits dropped to €1.54 million from €6.1 million because of the slowdown in the property market in the second half of 2001.
When exceptional gains on disposals of premises and investments are stripped out, 2001 profits were down to €385,443 from €4.1 million for the previous year, a fall of more than 90 per cent.
With diluted earnings per share (EPS) down to 4.55 cents from 31.44 cents, shareholders will not get any final dividend. Their one-cent interim dividend compares with a total payout of four cents per share in 2000.
Excluding the exceptional gains, the group recorded a loss per share of 3.96 cents for 2001 compared with earnings of 16.82 cents for 2000. EPS forecasts (diluted) had already been downgraded to between 0.7 cent and 5.3 cents following two profit warnings from the group. On a quiet day, the share price closed unchanged at €1.25 yesterday.
Stating he was "cautiously optimistic" for the current year, chief executive Mr Mark FitzGerald expressed confidence that initiatives taken by the group in the second half of 2001 had placed it in a "a very solid position to benefit from any continuing upturn in activity as it emerges".
Activity levels in the residential market have been strong in the current quarter, with a significant increase in consumer confidence and people making up for lost time following the December Budget changes, he commented.
The trend of falling house prices evident in 2001 had been reversed and early indications suggested second-hand house prices had risen by close to 6 per cent in Dublin and by 5.5 per cent nationally in the first quarter, effectively putting house prices back where they were in January 2001, he said.
In the commercial market he described the environment as challenging against a backdrop of a difficult global economy. Recovery, when it happened, was likely to be slower and at a steadier pace, he commented.
The 2001 results show a 16 per cent fall in turnover to €22.8 million. In its core residential market, the group said it sold more than 1,500 units in 2001 through Sherry FitzGerald Residential, down 23 per cent on 2000 sales.
Sales were hit by the fall off in demand from investors following tax changes on foot of the third Bacon report and a drop in consumer confidence after September 11th. Turnover at its new homes unit was down 8 per cent.
Despite a 20 per cent reduction in operating costs to €6.8 million, operating profits were down to €1.4 million from €4.5 million. At the end of the year, the group profit attributable to shareholders was €620,971, down from €4.3 million for 2000.
But the group generated net cash inflows from operating activities of €5.3 million, up from €2.8 million and reduced debt by 53 per cent, ending the year with a debt-equity ratio of 18 per cent down from 41 per cent at the end of 2000.
