Savills cautious after 24% drop in 2009 profit

Published 18th Mar 2010

Savills today reported a 24% drop in underlying pretax profit for 2009 and cautioned that its performance for this year would be similar.

The fall in profit from £33.2m in 2008 to £25.2m came after a 1.4% decline in revenue to £560.7m and cost savings of £62m. Like the UK property market, the figures reflected a year of two halves.

In the weak first half Savills made a profit of just £2.5m, but in the much stronger second half it made £24.7m.

The biggest contribution came from property management, which generated revenue of £215m and profit of £12.6m. This division is strong in Asia Pacific and the UK.

The consultancy division produced profit of £10.9m, which was 33% lower than in 2008 and fund management generated a profit of £2.9m, which was 19% lower.

The transactional advice division produced £6.3m of profit, which was double that in 2008. Within the transactional division the UK residential division was the star performer, making a profit of £11.8m, while UK commercial made £1.2m.

Asia Pacific made a profit of £6.8, but the continental European teams lost £9.6m and the US lost £3.9m.

"UK residential performed strongly as markets recovered and the performance of our Asia Pacific businesses, which now represent 38% of revenues, endorsed our strategic decision to expand in this region," said chief executive Jeremy Helsby.

Savills reported pretax profit for accounting purposes was £13.5m, compared with a loss of £7.7m in 2008, which came after £33.9m of one-off charges.

The reported profit is less than the underlying, which gives a much better reflection of the company's performance, because it takes into account non-cash items, such as amortisation of intangible assets, such as software, goodwill impairment and adjustments for share-based bonus payments.

Helsby warned that market conditions remained "unpredictable".

He said: "We maintain a cautious stance and anticipate that our overall performance in 2010 will be similar to that of 2009, although the relative contributions of our individual businesses may be somewhat different."

Source: ' Property Week '

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