Abbey warns of UK labour supply as homebuilder posts €58.6m profit
Irish home builder Abbey made a €58.6m operating profit in its last financial year, substantially higher than had been expected by analysts, as it benefited from higher margins in the UK, its main market.
But it has warned that a tight supply in the UK for both labour and material are a "significant constraint" to its activities. It also said Brexit could have a detrimental impact.
"The level of uncertainty with which we have to cope continues to rise," noted Abbey. "By this time next year the UK will likely be outside of the EU and facing a higher risk premium on all UK investments.
"A disrupted Brexit will also impact unfavourably on the rest of the remaining 27."
Stock market-listed Abbey said that it's backed by a strong balance sheet and that it will continue to invest to meet the need for new homes in all its markets.
Abbey completed 524 sales in the UK in the 12 months to the end of April, 75 in Ireland and seven in the Czech Republic. It said the Government's Help-to-Buy scheme introduced last year here has been a "key factor" in supporting home-building activity in Ireland.
But Abbey also warned that while margins had been maintained at "good levels" during the year, they will continue to "at least gradually fall back from their recent elevated levels".
The group's operating profit for the last financial year was down from €60.8m the previous year.
Abbey posted revenue of €218.4m in the year to the end of April, compared to €216.4m in the previous 12 months.
Its UK plant hire business accounted for €19.5m of group revenue last year, and almost €3m of operating profits.
In the UK, Abbey's revenue from home sales was €166.9m. In Ireland, it generated €25.3m from such sales, and €5.5m in Czech Republic.
The UK accounted for €46.2m of Abbey's operating profit, with Ireland accounting for €5.4m.
Abbey, whose executive chairman is Charles Gallagher, said forward sales in the UK "are healthy and recent activity has been normal for this time of year".
It added: "Production is a high priority and tight market for labour and material are a significant constraint. The UK land bank was maintained in excess of 2,000 plots and is a firm foundation for a rise in output this year."
In Ireland, Abbey said that projects in Ratoath in Co Meath, and Cornelscourt in south Dublin, made "good contributions" to its group results.
It said that further growth is being pursued in Ireland, and new projects in Navan are being brought into production.
"Plans are well advanced for the resumption of our developments in Laois when conditions allow," it added.
Abbey was subject to an unsuccessful €145m buyout approach by the Gallagher family in 2012, during the depths of the financial crisis. The company now has a market capitalisation of €325.8m.