Savills Sees Profit Fall And Warns Of ‘challenging’ Year Ahead

Savills has posted a drop in profit to £153.9m, from £183.1m in 2021, for the year ending 31 December 2022, despite growth in revenue.

Revenue increased 7% to £2.30bn, with the increased fuelled mainly by its property management business.

Key financial highlights

  • Group revenue up 7% to £2.3bn (2021: £2.15bn)
  • Underlying* profit before tax decreased 18% to £164.6m (2021: £200.3m)
  • Reported profit before tax decreased 16% to £153.9m (2021: £183.1m)
  • Underlying basic EPS down 19% to 94.9p (2021: 116.5p); reported basic EPS down 17% to 87.0p (2021: 104.9p)
  • Aggregate proposed final and supplementary interim dividends of 29.0p (2021: 28.35p, together with a one off special dividend of 27.05p)
  • Net cash** £307.4m (2021: £340.7m)

* Underlying profit before tax (‘underlying profit’) is an alternative performance measure used to assess the performance of the Group. It is calculated on a consistently reported basis in accordance with Note 3 to this Preliminary Statement.

** Net cash reflects cash and cash equivalents net of borrowings and overdrafts in the notional pooling arrangement (see Note 8).

Key operating highlights

  • Transactional Advisory revenues up 4% despite challenging market conditions, particularly in H2; Residential Transaction revenue down 2%.
  • Less transactional businesses, in aggregate 60% of Group revenue, continued to perform well with revenue up 9%.
  • Property and Facilities Management revenue up 13%, Consultancy revenue up 4%.
  • Savills Investment Management revenue up 1%, Assets under Management (‘AUM’) up marginally from £21.9bn to £22.1bn.

Mark Ridley, group chief executive, said: “Performance in 2022 was slightly ahead of our expectations despite challenging markets. More importantly, perhaps, the Group’s performance was substantially ahead of the 2019 ‘pre-COVID’ comparative period. The strength of our less transactional businesses, primarily Consultancy and Property Management, helped underpin the Group’s performance overall.

“In the year ahead, challenging macro conditions are expected to continue with inflation and interest rates remaining in focus for some time. As a result, the speed at which individual investment markets adjust to the cost of debt is uncertain, although certain markets, such as the UK, are recalibrating faster than in the past, and will be helped by the lack of development supply and an overall trend to sustainability. We would also expect that the release of COVID restrictions in Greater China paves the way for progressive improvement in real estate markets in the region.

“We have started 2023 broadly in line with our expectations. However, it is clear that, at this stage, predictions for the full year are characterised by a wide range of possible outcomes; we believe that H1 2023 will be more challenging than its 2022 comparative; however, we expect progressive improvement through the second half of the year. 2024 should see more positive conditions for real estate market activity and Savills is both retaining its bench strength and investing in advance of such recovery.”

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