Profits at house-builder Abbey plc dropped 3 per cent to €45.4 million in the 12 months to the end of last April, the company said yesterday.

Abbey said that sales dropped 6 per cent to €192.2 million in 2007, from €204.5 million the year before.

Profits before tax slipped by 3 per cent to €45.4 million from €47 million. Earnings per share were 118.66 cent, up 4 per cent from 113.78 cent last year.

Abbey builds and sells new homes in Ireland and Britain. Last year about two-thirds of its sales were in Britain.

The group said yesterday that "in Ireland a good sales effort with good results, particularly in the midlands, was let down by construction delays, and as a result completions fell well short of our best expectations".

Chairman Charles Gallagher yesterday said Abbey's Irish business had been good so far this year. "Prices are still higher than they were in December 2005."

He added that Abbey launched four housing schemes this year, and had had good demand for houses in all of them. "The underlying market is quite good."

The group is continuing to perform well in Britain. Last year it sold 457 homes there, compared to 220 in Ireland.

"The market in England is very buoyant, particularly in the south, and it's not showing any signs of slowing," Mr Gallagher said. "Supply is tight and that is helping it."

However, the group pointed out that an increasing number of its homes were being sold at cost to local authorities here and in Britain for social housing purposes.

"The impact of this evolution of our business is likely to be more noticeable this year and is contributing to the margin squeeze facing the business."

He said social housing contributions were pulling back Abbey's margins. It had brought down the average price of its homes in England to £165,000 (€243,000).

The board is proposing to pay a final dividend of 24 cents a share on top of the 36 cents a unit already paid this year.