Abbey returns to profitability

ABBEY, the Dublin-headquartered house-building group, has reported a significant return to annual profit, but has warned that sales and profits are likely to take a hit in its current financial year.

The group, which trades in Ireland, England and the Czech Republic, yesterday reported a pre-tax profit of €15.2 million for the 12 months to the end of April.

This represented a turnaround from a pre-tax loss of €54.4m in the previous year. A strong showing in the English market, particularly during the second half of the year, coupled with an absence of any land impairment charges, which blighted the previous year’s figures, drove the return to profitability. Turnover for the year amounted to nearly €87m.

However, sales are expected to fall in the current year — maybe by as much as 20% — and the group’s profits are also likely to decline, as market conditions remain tough. But, Abbey is still likely to remain profitable this year, management has stressed.

“The outlook for the year ahead is for lower levels of housebuilding activity in both Ireland and England, as we operate with slow moving stock in Ireland and depleted stock levels in England. Looking further ahead, the acquisition of fresh building land in England is now underway and, with a fair wind, the current year may mark the low point for our UK turnover in this cycle,” said group chairman Charles Gallagher.

In its last financial year, Abbey completed 535 house sales, 395 of which were located in Britain, 112 in Ireland and 28 in the Czech Republic. That overall figure could be down by around 20% by the end of the current year.

“We are budgeting significantly lower turnover in both England and Ireland this year, reflecting our relative success in sales during the reporting period and the slow pace of our restocking,” added Mr Gallagher.

With regard to the Irish market, Mr Gallagher said, while conditions remain very challenging, shafts of light of recovery are evident.

On the back of yesterday’s results, Abbey’s share price closed at €4.39 (a 0.9%/4c increase) having been up by 12c at €4.47 earlier in the day.

Abbey’s Britain-based plant hire business, M&J Engineering, reported operating losses of €780,000, on a turnover of €10.1m.