Abbey up 73% at interim

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The Independent Online
Robust performances from its housebuilding and plant-hire businesses have powered a halftime profits advance at Abbey, although directors warned that the UK housing market is now less encouraging.

The shares jumped 10p to 150p as Abbey, also listed in Dublin although 85 per cent of sales are in the UK, disclosed that taxable profits rose 73 per cent to Ir£4.58m (Ir£2.65m) in the six months to October 1994.

The housebuilding/property arm made strong gains, with profits of Ir£3.4m (Ir£1.8m), as a shift to bigger, detached houses boosted margins from 12 to 18 per cent.

Charles Gallagher, chairman, said: "The UK housing market was flat from 1989-92 when you could only build smaller homes. Now we are seeing an improvement, with more four-bedroom detached properties."

Abbey's UK housebuilding division, based in the South-east, completed 227 sales against 211 last time. The average price was £76,000 (£58,000). Mr Gallagher said 60 per cent of its houses were now detached compared with 40 per cent last time.

He said the threat of higher interest rates had made the market less encouraging. Negative equity, where the house is worth less than the outstanding mortgage, "has proved more stubborn than expected". Prices in the South-east would have to rise by 15 per cent to surmount the problem.

Infrastructure spending propelled Abbey's plant-hire profits strongly to Ir£913,000 (Ir£196,000), with margins soaring from 4 to 17 per cent.

The interim dividend rises by 5 per cent to Ir2.1p. Dublin brokers are pencilling in full-year taxable profits of Ir£9.5m. "The shares are a buy as it's hard to believe that at this part of the cycle the UK economy has seen its best. The numbers are goodeven if there is an element of caution," a broker said.

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