Abbey profits drop by €2m

IRISH housebuilding group, Abbey has reported a near €2 million year-on-year drop in first-half profits, due mainly to a decline in its best performing British-based division.

The Co Meath-headquartered group yesterday reported a pre-tax profit of €3.35m for the six months to the end of October. This was down from a pre-tax profit of €5.55m for the corresponding period last year.

First-half operating profit was also significantly down; from just under €4.4m a year ago to just shy of €2.3m; also well below analyst forecasts of €5.6m. Group turnover, meanwhile, amounted to €33.2m, up by 11% year-on-year, with earnings per share down from 17c to 11c. An interim dividend of 3c per share has also been declared.

“The key driver behind the miss is profitability is the UK housing division,” noted Goodbody Stockbrokers analyst, David O’Brien.

“The balance sheet remains in good shape, with net cash of €74m — which is ahead of our estimate, due to lower than expected working capital outflow, indicating that land purchases during the period were minimal.”

Chairman Charles Gallagher remained cautious, saying the outlook “continues to be difficult”.

“House prices remain under pressure in all our markets. Negotiations are proceeding on a number of land purchases, which should gradually allow volumes to increase in the reporting periods ahead.

“New land purchases, however, are — viewed in the current light — being made on narrow margins. Overall, the group continues to trade profitably and is laying the foundation for hopefully better days ahead,” he added.

Abbey said that the bulk of its Irish sales are centred around its development in Kilcoole, Co Wicklow, which it says is continuing to prove popular.