QUOTED builder Abbey expects to start work on its first development in the Czech Republic later this year. The company is seeking growth opportunities beyond its core markets in the UK and Ireland.

Abbey last week reported a 2.4% drop in sales and a 16% fall in profit to 16.9m over the six months to the end of October 2005.

"Margins have continued to be eroded, " said chairman Charles Gallagher, citing difficult conditions in several areas in Britain, although the Irish market remains strong. "The housing market in southern England remains challenging, although some slight improvement has been evident towards the end of the calendar year."

The going appears to be tough throughout the UK residential construction sector. Taylor Woodrow and Bovis, two of the largest builders in the UK, both released disappointing numbers last week.

A series of interest rate rises by the Bank Of England over the last year seems to have succeeded in taking the heat out of the housing market with price growth levelling and demand cooling off.

Abbey shares dropped just under half a percent following the earnings statement and Gallagher's comments. The shares, which ticked up slightly to 10.80 in the first week of January trading, are now valued at 10.30.

HEITONS PULLS WEIGHT AS GRAFTON THRIVES

TURNOVER at builders merchants and DIY group Grafton increased by 42% to more than 2.6bn last year, the company's trading statement revealed last week.

The lift in sales and the 20% increase in earnings were due in part to the full effects of the 359m Heitons takeover.

The 2005 results are likely to be in line with market indications and show that Heiton is performing ahead of management expectations, while the Irish market as a whole is buoyant.

These two factors helped compensate for weaker trading conditions in the UK, which accounts for more than half of Grafton's profits.

Grafton made 17 acquisitions in Ireland and Britain during the year, including the takeover of its former rival Heiton, and opened 19 new outlets, including four new Irish DIY stores.

Difficult conditions in Britain are expected to continue in the early part of this year, but management at Grafton feel the prospects look somewhat better for the second half.

TYSABRI SEESAW SEES ELAN SOAR AGAIN

ELAN saw its stock soar more than 17% last week on the back of comments made by the chief executive of its development partner on the Tysabri multiple sclerosis drug, Biogen Idec.

James Mullen reiterated that he expects a US Food and Drug Administration review of Tysabri to be completed by the end of March, and that he believes the drug could be available to patients again by the middle of the year.

The drug was pulled from trials following the diagnosis of a rare brain disease in three patients, two of whom died. It seems almost certain at this stage that PML was prompted by taking combination drug therapy that affected the immune system. As such, Tysabri will likely become a monotherapy to ensure safety.

Elan's stock was trading at 13.70 on Friday morning, up 65 cent since opening and up from an opening of 11.66 on Monday. It closed at $16.19 In New York on Thursday. It is expected that the Tysabri market could be worth $1.9bn in annual sales by 2009, with Elan pocketing 50% of those revenues.

The recent rise in the share price has been fuelled by what Goodbody Stockbrokers says is perhaps a greater understanding of the potential Elan pipeline for Alzheimer's treatments.

One drug could reach the final trial phases by the end of this year, while Elan has a number of other treatment candidates under development.

Goodbody warned that, while there may be room for further appreciation, the stock could be hurt by a lack of positive newsflow to support the rise. It is rating the stock as an 'add'.

HOME DEPOT MOVE AUGURS WELL FOR CRH

The inherent value of CRH's American business was underlined last week with a takeover in the sector at multiples much higher than those currently being applied to the Irish company, according to Goodbody's Robert Eason.

American DIY giant Home Depot is paying $3.47bn to acquire Hughes Supply in an agreed takeover. Hughes supplies builders and local governments with products such as sewer piping and heating systems, and the purchase brings Home Depot more into the professional construction sector.

Hughes has 500 locations in the US and estimated sales of $5.3bn, which produce operating profits of $260m and Ebitda of $290m. On that basis, the Home Depot purchase was completed on a multiple of more than 13 times operating profits and 12 times Ebitda.

Eason estimates that, through its network of 150 outlets, CRH's American distribution business (which represents about 6% of the entire group) has sales of $1.7bn and profits of about $120m. CRH was last week trading on a multiple of about 10 times operating profits and just 7 times Ebitda. On that basis, a sum of the parts valuation for CRH is well in excess of the current share price.