Savills full-year revenue and profit rise but outlook cautious
Real estate advisor Savills said on Thursday that underlying pre-tax profit nudged up in 2018 as revenue rose, but the company sounded a cautious note on the outlook.
FTSE 250
19,712.45
11:20 25/04/24
FTSE 350
4,442.98
11:20 25/04/24
FTSE All-Share
4,396.66
11:20 25/04/24
Real Estate Investment & Services
2,159.59
11:20 25/04/24
Savills
1,058.00p
10:44 25/04/24
In the year to the end of December 2018, underlying pre-tax profit increased 2% to £143.7m on revenue of £1.76bn, up 10%. Analysts had pencilled in profit of £142.8m and revenue of £1.64bn.
Statutory pre-tax profit was down 3% to £109.4m and underlying basic earnings per share were 3% higher at 77.8p.
Savills said the results were achieved against a backdrop of heightened uncertainty as Brexit, US trade policy and higher long-term treasury yields, particularly in the benchmark US 10-year Treasury bond, began to dent investor sentiment in a number of its key markets.
In addition, currency movements reduced revenue by £20.7m, underlying profit by £1.3m and statutory pre-tax profit by £0.5m.
Revenue in the transaction advisory business grew 9%, while the consultancy business saw revenue increase 8% and Savills' property management revenue was 14% higher in the year.
Chief executive Mark 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.
"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."
At 0850 GMT, the shares were down 8.8% to 842.68p.
Peel Hunt cut its rating on the stock to 'hold' from 'buy' on Thursday as the shares have hit its 925p price target. It said the numbers were in line but it's "time for a breather". The broker said underlying pre-tax profit of £143.7m was broadly in line with its estimate of £143m.
"The shares have had a very strong run in the year to date (+30%) and trade on a CY19 price-to-earnings of 13.7x with a free cash flow yield of 7% and a dividend yield of 3.4%. Now trading in line with our target price, we move our recommendation back to hold from buy."