Countrywide's H1 earnings to take £5m hit from Brexit uncertainty

Integrated property services group Countrywide warned on Tuesday that first-half adjusted earnings will be down around £5m on the year as markets take a hit from Brexit uncertainty, but adjusted earnings for the year should be in line with the board's expectations.

In an update for the quarter to the end of March 2019, the company said "the ongoing uncertainties surrounding Brexit continue to weigh heavily on consumer confidence as a whole". In particular, it said uncertainty was impacting the residential and commercial property markets, namely in London and the South.

As a result, total group income in the first quarter fell to £140.3m from £144.6m in Q1 2018.

Countrywide had previously said it expected first-half adjusted earnings before interest, tax, depreciation and amortisation to decline by around £3m to £5m. However, it now expects EBITDA to drop by £5m on the year.

"The series of self-help measures that we have put in place to re-align the cost base to the lower level of market activity continue to be implemented and we expect the benefits of these actions to come through during the second half," it said.

"As a result, for the full year, the group expects adjusted EBITDA to be broadly in line with the board's expectations."

Jefferies said this was a "reassuring outlook in a difficult context".

"While Countrywide's EBITDA in 2019 is supported by its financial services and B2B operations, we see the currently loss-making estate agency business as the fulcrum for share price performance.

"The 'back to basics' efforts announced at the share placing last August are now largely in place, and we believe the business is better poised to leverage to any housing market recovery. However, until investors gain confidence in an improvement in the housing market, the increasing leverage on the balance sheet may restrain share price momentum."

At 0940 BST, the shares were down 1.7% at 6.92p.