CBRE has posted a significant fall in earnings in the final quarter of 2022, but president and chief executive Bob Sulentic has underlined that he is looking ahead to a “record rebound” in 2024.
Revenue grew by 11.1% to $30.8bn (£25.6bn) during the year ending 31 December 2022. Core EBITDA rose by 2.1% to $2.9bn.
GAAP earnings per share dropped by 20.7% to $4.3 year-on-year, with GAAP net income down by 23.4% to $1.4bn. However, core earnings per share increased by 6.7% to $5.70.
Free cash flow declined by 36.5% to $1.4bn during the year, after capital expenditure.
During Q4 2022, revenue fell by 4.2% to nearly $8.6bn compared with the same quarter in the previous year. GAAP EBITDA plunged by 87.5% to $0.25, with core EBITDA down 26% at $1.30.
In the capital markets division, global sales revenue fell by 47% on the back of a highly constrained capital environment.
Combined EMEA/APAC sales revenue dropped by 33%, although CBRE said its performance in China, India and Japan showed strong growth before currency effects. In the US, sales revenue was down 53% on the previous year.
Global Q4 leasing revenue declined by 7%, driven by a 7% decrease in revenue in the US business. CBRE said it fell across all major property types, except retail.
The UK was earmarked as a notably strong performer for leasing revenue, alongside the North Asia and Pacific markets. Combined EMEA/APAC leasing revenue was up 7% in local currency terms, although it was down by 6% on a US currency basis.
Sulentic said that although core earnings declined “significantly” in Q4, they slightly exceeded CBRE’s own estimates.
Sulentic cited “better-than-expected growth” in several of the more “cyclically resilient” elements of the business, such as outsourcing, as well as others that are “secularly favoured”, including project management and the logistics asset class. However, he noted those were offset by a slightly larger-than-expected decline in transactional revenue.
“For all of 2022, we achieved a solid, 7% growth rate in core earnings per share despite the more than doubling of long-term interest rates, sharp equity market decline and the credit crunch that constrained investment activity for most of the second half,” added Sulentic.
Core earnings per share are expected to fall by low- to mid-double digits during 2023. Sulentic said that despite the forecast, it will be third-highest in CBRE’s history.
Sulentic said: “While the macro environment can certainly change, we expect core earnings-per-share to grow strongly in 2024, exceeding the 2022 peak and reaching a record level in just the first year after a recession.”
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