Abbey to build more, but profits dip

By Geoff Percival

Meath-based housebuilding group Abbey has said its latest annual operating profits will be down on the previous year, due to lower margins.

The firm plans, however, to increase its housing output in the coming 12 months.

The Clonee-headquartered company — which is active here, in the UK, and the Czech Republic — is due to publish annual results, for the 12 months to the end of April, early next month.

In a pre-close trading update, Abbey said group turnover for the year is “at similar levels” to the previous year.

However, it added that due to “somewhat lower margins” operating profit “will fall short of last year’s return”.

Abbey generated revenues of €216.5m in the year to the end of April 2017, with operating profit for that year unchanged at just under €61m.

In its update, Abbey said forward sales are “satisfactory” and that its housing division — it also owns a UK plant hire business — is “on target” to sell more houses in the year ahead.

Abbey said it had completed 606 house sales during its latest financial year; 524 of which were in the UK, 75 in Ireland, and seven in the Czech Republic.

“The outlook comments remain positive, with forward sales described as satisfactory and the housing division on track to build and sell more new homes in the year ahead,” said Davy Stockbrokers, which had already factored in the lower margins into its forecasts.

That said, Davy had expected stronger group revenues of around €221.6m for the year.

Abbey’s building output has been improving. The most recent year’s tally was up from 586 sales the previous year; 495 of which were in the UK, 39 being in Ireland and 52 in the Czech Republic.

However, Goodbody chief economist Dermot O’Leary last week warned that housebuilding in Ireland remains at “unsustainable and incredibly low levels” and is nowhere close to meeting demand.

The knock-on effect of that, he said, will likely be a continuation of rising house prices.

Mr O’Leary has forecast house prices to rise by 9% this year and by 6% in 2019.

Back in December, Abbey said it was upbeat about its prospects after reporting an 8% year-on-year rise in first half profits and said it was “strongly” pursuing new residential building projects.

It said it was continuing to plan for growth despite higher interest rates and slowing economic growth in the UK tempering its medium-term outlook for its largest market.

It also warned of the possible negative impact of Brexit on both the UK and Ireland.

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