Housebuilder Abbey accompanied a better-than-expected annual profit by warning that the impact of Brexit has clouded the outlook for its business in the UK and Ireland.
The company’s pretax profit surged 25 per cent to €61.5 million, beating stockbroking firm Davy’s €54.5 million estimate as Abbey’s UK home sales rose almost 6 per cent to 544 homes, while it completed 23 transactions in Ireland and 30 in the Czech Republic.
Shares in the company rose 1.45 per cent to €12.60 by 9.35am in Dublin.
“Trading in the early part of the new year has been encouraging and the group has set budgets for the year showing increased activity across the business, however, the outlook is now clouded by Brexit,” Abbey said.
“ A slowdown in the UK economy is now being forecast and in particular a correction in the housing market after its strong performance in recent years. Prospects for the short, medium and long term are now very unclear.”
The housing marking in London and south east England faces a “prolonged period of gradual relative decline” if the UKcapital’s withdrawal from its role in Europe is carried through, it said.
Abbey also said that outcome of the UK referendum “casts a considerable shadow” over a recovering Irish market.
Still, the comany said its strong balance sheet leaves it well placed to cope with uncertainty. It held €90.4 million in cash and €12.7 million in UK government bonds at the end of the financial year.
"Full-year 2016 was an extremely strong year for Abbey. Margins were up significantly in the company's main divisions and activity progressed in almost all areas," said Colin Sheridan, an analyst with Davy.
Abbey owned or controlled 1.498 plots in the UK at the end of April. It has since bought additional land and continues to look for further acquisition opportunities,it said.
In Ireland, a project in Lucan,in west Dublin, is near completion, while its development in Delgany, Co. Wicklow was launced in June.
“More land has been bought in Ratoath, Co. Meath and Cornelscourt, Co. Dublin and both these schemes are now under construction,” it said, adding that projects in Laois and Kildare remain on hold pending improvement in local demand. “Effective demand for new home ownership in many parts of the wider Dublin metropolitan area remains muted.”
