Savills warns of tough year ahead as profit slips
Pre-tax profits fell 3% last year due to currency headwinds.
Savills reported a 3% fall in profits as the estate agency warned of a tough year ahead due to economic and political uncertainty.
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Chief executive Mark Ridley expects lower property transaction volumes across markets this year despite a strong start to the year.
He said: “We have made a solid start to 2019; however, the year ahead is overshadowed by macro-economic and political uncertainties across the world.
“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.”
Shares were down 5% to 877p in early trade.
Savills, meanwhile, made a pre-tax profit of £109.4 million in 2018 compared with £112.4 million the year earlier after booking a one-off £3.1 million charge related to equalising guaranteed minimum pension benefits for men and women after new rules were enforced.
Profits were also weighed by currency headwinds and negative investor sentiment due to uncertainty surrounding Britain’s impending departure from the European Union and US trade policy.
However, revenue increased 10% to £1.76 billion.
Underlying profits, the company’s preferred measure, rose 2% to £143.7 million thanks to growth from non-transactional business such as property management.
Revenue in its core UK arm increased 6% to £662.4 million, while underlying profits were relatively flat at £76.8 million.
The company has made a number of acquisitions in the UK, including Broadgate Estates’ third-party property management portfolio from British Land.
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.”