Abbey's 24% profit rise beats forecasts

Housebuilder Abbey has beaten market expectations with a 24 per cent jump in pre-tax profits for the year to April 30th.

The firm, which operates in both the Republic and the UK, has also told shareholders that its prospects remained good in the near term, in spite of the "considerable uncertainty" that surrounds house prices.

Abbey made profits of €60.2 million last year, up from €48.5 million in 2003. Operating profits were ahead by 28 per cent at €58 million.

The growth came as revenues climbed by 15 per cent to €201.5 million. The bulk of this came from the firm's housebuilding operations, where turnover rose by 18 per cent to €180 million.

The company built 407 houses in the Republic and 385 in the UK over the year.

Abbey executive chairman Mr Charles Gallagher said the firm hoped to increase turnover in housebuilding again this year, noting that forward sales were "fair". Abbey is forecasting a "particular improvement" for its UK housebuilding business, even though rising interest rates are already having an impact on the market.

Mr Gallagher added that house prices in the Republic should dampen in due course as the volume of housing output continues to grow. A new report from Davy Stockbrokers is expected to predict that 90,000 housing units will be built this year, up from a record 69,000 in 2003.

The average price of an Abbey house in the Republic last year was €203,000.

Mr Gallagher said he expected house prices to begin growing at "a more normal rate" before long.

He also predicted that the firm's housebuilding margins would decline over coming years, having come in at a healthy 30 per cent in the year to April.

Abbey spent €1.5 million on the purchase of 10 acres of land in the Czech capital, Prague, in the last three months.

Mr Gallagher said the firm planned to build 95 houses on the plot and sell them for about €110,000 each. The target market is the Czech middle class, with the firm planning to raise its output in the central European country to 400 houses per annum over the next 10 years.

"We might get the benefit of a very sharp increase in prices," said Mr Gallagher.

Profits remained steady at €2.1 million in Abbey's plant hire business last year, while the firm's joint-venture development with Tower Homes in Dublin brought in €1 million in profits.

Abbey will pay a dividend of 20 cents per share for the second half of the year. This lifts the full-year dividend to 30 cents, up 36 per cent on 2003.

Abbey's shares dropped eight cents yesterday to €8.60 on low volume, having strengthened significantly in recent weeks.