Abbey reports improved profits, turnover

Group turnover and profits at house-builder Abbey are running ahead of last year's figures, executive chairman of the group Mr Charles Gallagher said yesterday.

"The overall group is on target and the outlook for the year is good," he said at Abbey's a.g.m. While buoyant house prices have been good for the company, the very rapid increases in prices are putting pressure on costs, he said.

"The markets have been very buoyant and that's encouraging, but too much price inflation creates difficulties, such as too much labour price inflation," said Mr Gallagher.

However, he said he did expect the recent rise in interest rates to have a big impact on the group's Irish operations.

"Generally speaking, obviously it's not healthy for the construction industry, but I think it's fair to say that interest rates by any standard remain low," he said. The base rate was low in the Republic, particularly for an economy which was growing by up to 9 per cent, he added. "The Irish economy is very strong and, provided employment remains strong, I think there is value to be had in the end of the market we're in - first-time buyers," he said.

While there has been a slight slowdown in the British market, Mr Gallagher said UK operations remained healthy. The UK division, with a turnover of £86 million, provides the bulk of Abbey's business. Turnover in its Irish business was £25 million.

Abbey reported a profit for last year of £29.9 million. The sale of investments added £5.16 million - these included the group's property investments in Fenian Street and Trinity Street, which were sold for £3.56 million.

"We made the decision to dispose of those assets and return those funds to the shareholders," said Mr Gallagher.

A final dividend of 7p per share was approved, making a total of 51p per share.