Shares in Savills fall as the upmarket estate agent warns its outlook is overshadowed by 'political uncertainties'FTSE-250 group's sha
Shares in Savills fall as the upmarket estate agent warns its outlook is overshadowed by ‘political uncertainties’
- FTSE-250 group’s shares in the red amid 3% annual slip in profit
- Group did however, enjoy strong growth across Europe and the Middle East
Jane Denton For Thisismoney
High-end estate agency Savills has warned its performance for the year ahead looks set to be ‘overshadowed by macro-economic and political uncertainties across the world.’
Chief executive Mark Ridley said: ‘It is difficult accurately to predict the impact of these issues on corporate expansionary activity and investor demand for real estate.
‘At this stage, we expect to see declines in transaction volumes in a number of markets and growth in our less transactional business lines; accordingly we retain our expectations for the group’s performance in 2019.’
Overshadowed: Savills has warned its performance for the year ahead looks set to be ‘overshadowed by macro-economic and political uncertainties across the world’
The FTSE-250 group’s share price has dropped 7.66 per cent or 70.75p to 852.75p this morning.
Publishing its annual results today, Savills posted a 3 per cent drop in pre-tax profit to £109.4million, against £112.4million a year earlier.
Profits were hampered by currency headwinds and negative investor sentiment due to uncertainty surrounding Britain’s impending departure from the European Union and US trade policy.
The company’s annual revenue increased by 10 per cent to £1.76billion, amid ‘strong growth’ in its operations across the Middle East and Europe, where revenue rose by 34 per cent.
Revenue in Savills’ core UK business increased 6 per cent to £662.4million, while underlying profits were relatively flat at £76.8million.
Basic earnings per share dropped four per cent to 56.2p due to a fall in profit after tax.
The group’s total dividend for the year increased by 3 per cent to 31.2p a share, up from 30.2p a share a year earlier.
The company made a number of acquisitions, including Broadgate Estates’ third-party property management portfolio from British Land, as well as Cluttons Middle East.
Commenting on the group’s results, Mr Ridley said: ‘Savills delivered both revenue and underlying profit growth in 2018, driven by a robust second half of the year.
‘In addition to maintaining or growing our share of transactional markets, the performance of our less transactional business lines was key to this performance.’
Russ Mould, investment director at AJ Bell, said: ‘Given the breadth of its exposure to real estate, taking in the full spectrum of property services, Savills is seen as a bit of a bellwether for the sector.
‘As such today’s results are likely to have an impact beyond the company. As flagged in January, profit for 2018 was down 3%. But the reason for a negative market reaction to the numbers is the outlook.
‘Despite a “solid start”, the company expects to see transactions fall in 2019 as global economic and political uncertainties hit demand. This warning could well shake the foundations of the wider industry.
‘Beyond these macro concerns, at a micro level the company reaffirmed its backing for Yopa, revealing a small additional investment in the online estate agent.
‘This comes after fellow Yopa backer LSL Property Services wrote down the value of its holding in the company by 61% earlier this month.’