Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Glenveagh Properties PLC (FRA:GVR, Financial) delivered a record 24,150 new homes in 2024, achieving a record revenue of EUR869 million and an improved gross margin of 21.2%.
- The company launched a EUR65 million share buyback program and achieved a strong EPS increase of 112%, demonstrating a commitment to shareholder returns.
- Glenveagh's strategic expansion of its landbank supports long-term ambitions, with a controlled landbank of up to 20,000 units to support delivery through to 2029.
- The company's innovation in offsite manufacturing and standardization has led to increased efficiency, speed, and cost control, contributing to margin expansion.
- Glenveagh's partnership segment saw significant growth, generating EUR120 million in revenue, up from EUR17 million in 2023, with plans for further expansion in 2025 and beyond.
Negative Points
- There are challenges in the housing delivery due to the need for substantial additional capital, adequately zoned land, public sector resources, and critical infrastructure.
- The company faces constraints in infrastructure, particularly with Irish Water and grid challenges, which could impact future developments.
- The land market dynamics show limited availability of zoned land, which could pose challenges for future acquisitions and development.
- Glenveagh's operating cash outflow for the year was EUR93.4 million, compared to an inflow of EUR50.9 million in 2023, reflecting increased land investment.
- The company's net debt position increased to EUR179 million, or 15% of gross assets, which, while within the guided range, indicates a higher leverage.
Q & A Highlights
Q: Can you elaborate on the impact of vertical integration on labor and processes, and the benefits to the group? Also, what does the EUR25 million investment entail?
A: Stephen Garvey, CEO: We aim to reduce on-site labor by increasing off-site manufacturing, which will save time and costs. The EUR25 million investment is for equipment and extensions of existing facilities, not new ones. This will enhance our ability to manage ground conditions and reduce delivery timeframes, ultimately benefiting our margins and efficiency.
Q: How quickly can the new land purchases from 2024 be progressed through the planning system?
A: Stephen Garvey, CEO: Some sites are already under construction, while others will take 12 to 30 months to progress through planning. We are confident in our acquisitions and plan to recycle non-core sites over the next 12 to 24 months.
Q: What is the outlook for the partnership segment and its potential contribution to revenue?
A: Stephen Garvey, CEO: We aim to have 6 to 8 partnership sites, contributing significantly to our business. The state is a major landowner, and we see opportunities in collaborating with them to deliver housing efficiently. Partnerships could account for 50% of our business in the future.
Q: Can you provide an update on infrastructure challenges, particularly with ESB and Irish Water?
A: Stephen Garvey, CEO: Infrastructure constraints are a challenge, but we are working with suppliers to address these issues. We are well-positioned with our large sites to facilitate utility companies, but the government needs to prioritize infrastructure improvements.
Q: What is the expected penetration of the facade system by 2027, and will additional facilities be needed for future growth?
A: Stephen Garvey, CEO: We plan to gradually increase the use of the facade system, aiming for 50% penetration by 2030. No new facilities are planned currently, as we will focus on optimizing existing ones. The home building business will see higher penetration due to its typology.
Q: How has the land market evolved, and what are the dynamics affecting land prices?
A: Stephen Garvey, CEO: Land costs as a percentage of net development value have decreased, allowing us to maintain margins. Limited capital availability and high financing costs for competitors have created opportunities for us to acquire land at favorable prices.
Q: Are the timber frame factories at breakeven, and how do they compare to third-party procurement?
A: Conor Murtagh, CFO: Our timber frame factories are already making a positive contribution compared to market procurement. They reached breakeven in 2024 and will continue to contribute positively in 2025.
Q: What is the strategy for managing the state land bank, and how will it impact future projects?
A: Stephen Garvey, CEO: We aim to collaborate with the state on large sites, potentially delivering 500 to 600 units annually. These sites are well-located with existing transport infrastructure, and we see significant opportunities in partnering with the state to maximize returns.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
