Higher margins help Abbey beat market expectations
The group has operations in Ireland, Britain and the Czech Republic and reported pre-tax profits of €5.5 million for the six months to October 31 against €3.6m for the same period last year.
Revenue fell from €41.6m to €36.7m.
Despite the better than expected outturn the company warned of continuing tough trading conditions.
“The outlook for the foreseeable future is quite bleak.
“The group is, however, trading profitably and, in due course, a cyclical recovery will take hold,” chairman Charles Gallagher said.
He warned that lack of funding in Ireland and Britain and in the Czech Republic will continue to hamper the already subdued demand being experienced in all three economies.
It could take “five years” for the Irish market which was hit harder than most to get back to normal, he said.
Lack of credit is the major problem.
“This is the defining issue. It is credit, it is mortgage finance,” he said.
The UK Council of Mortgage Lenders in a recent study of mortgages being written annually says this has fallen to 550,000, back to 1974 levels.
The figure is about half the level of mortgages written in better times, the report said. It all points to lower house prices until the credit question is resolved.
In Britain mortgage lending may be further constrained in 2011 and 2012 as emergency support measures to the banking system are unwound, he said.
Mr Gallagher, who stopped short of calling for a default by Ireland, said in the end the “debt will have to be written off”.
On the trading front the company said its house building division completed just 33 houses in Ireland in the six-month period, while it built 131 in Britain and eight in Prague.
Trading in Britain was “satisfactory” and Abbey said its second-half outlook is more than usually dependent on a strong performance in the last quarter of the year.
The group maintained good cash flow during the period and held €44.80m in cash and restricted cash together with €55.27m in UK government debt.
The board declared a dividend of 3 cents per share.
