'Bleak' outlook for Abbey despite 54pc profit jump
Irish home builder Abbey said the outlook for the foreseeable future is "quite bleak", even after it reported a 54pc increase in pre-tax profit to €5.5m for the six months ended in October.
In Ireland, Abbey, which is listed on the stock exchange, said it had made "steady progress" despite difficult market conditions.
At an operating level, group profits climbed 76pc to almost €4.4m for the period. Total revenue was 12pc lower at €36.7m, with just over €30m of that related to home sales and most of the remainder to plant hire.
The company, headed by executive chairman Charles Gallagher, sold 172 homes during the first half of its financial year, 33 of them in Ireland.
In the UK it sold 131; it offloaded eight in the Czech Republic, where it said sales continued to be "very slow".
It added that trading in the UK had been "satisfactory" while its plant hire business there generated a modest €165,000 operating profit in the period on €6.1m in turnover, which Abbey described as an "encouraging turnaround" from the corresponding period last year.
Davy Stockbrokers analyst Robert Gardiner described Abbey's results as being "well ahead" of his estimates.
Mr Gardiner said the stock made a "strong investment case".
Abbey purchased a total of 255 plots of land with planning permission during the interim period and noted that negotiations for further acquisitions were "in hand".
The company had cash and restricted cash of nearly €45m at the end of October, as well as over €55m in UK government debt. Abbey said it remained its intention to invest a "significant element" of these funds in new development sites as circumstances allow.
"The outlook for the foreseeable future is quite bleak," noted the company in its interim statement. "The limited availability of mortgage finance in all our markets continues to depress house prices. In Britain, mortgage lending may be further constrained in 2011 and 2012 as emergency support measures to the banking system are unwound."
However, the company added that in "due course" a cyclical recovery would take place.
Abbey declared a dividend of 3c for the period. Shares in the company closed unchanged at €4.90 in Dublin.