Savills has today posted a 7% increase in underlying pretax profit to £50.4m in 2011 despite weaker trading in Europe and the Far East.
The increase in profit came on the back of a 7% rise in group revenue to £721.5m in its preliminary full-year results for the year ended 31 December.
The property advisory firm managed to deliver the growth despite a 21% fall in underlying profit in its transactional advisory business in a year of “two contrasting halves”.
While the first half of the year was characterised by good transactional volume growth, the second half was characterised by falling levels of activity, particularly in Hong Kong and Continental Europe.
Revenue from UK commercial transactions remained broadly level at £47.9m, but a significant slowdown in activity in Q4 and investment in new teams such as the acquisition of Gresham Down saw profits dip from £7.7m to just £4.6m in 2011.
On the continent, commercial revenue declined by 14% to £26m and losses almost doubled to £8.8m, while Asia Pacific saw revenue drop 6% and profit slide 16% to £11.2m.
The firm was buoyed by its strong residential business, which in the UK saw revenue rise 9% to £95m and profit climb 11% to £14.8m driven by a booming London market.
In Asia Pacific, revenue grew by 18% to £19.9m, although an anticipated slowdown owing to government fiscal measure and start-up costs caused profit to dip 12% to £3.8m.
Across the group, consultancy revenue was up 7% to £143.4m, while profit rose 19% to £12.6m. Property and facilities management delivered strong results with a 14% rise in revenue and 16% hike in profits to £16.7m while fund management also saw profit shoot up 38% to £4.7m.
The group said it expects its bonus pool for the period to be down on last year, in line with the decrease in transactional activity.
Savills announced a 4% increase in its full-year dividend totalling 13.5p a share.
Group chief executive Jeremy Helsby said: “I am pleased to report a strong performance overall by Savills in variable global markets in 2011.
“Our positions in London and Asia, in both the residential and commercial markets, and a strong and growing non-transactional business provided the platform for this performance.
“Added to this, the relative recovery in our US business and strong profit growth in Cordea Savills enabled us to withstand the challenges in Continental Europe.
“We remain focused on reducing our losses in Continental Europe while at the same time supporting expansion in the core markets of France and Germany.
“Challenging markets can provide attractive expansion opportunities and we have been able to open additional offices in London, Germany, China, and the East and West Coast markets of the US.
“We continued to progress our strategy, investing in both our transactional and non-transactional businesses through targeted recruitment and selective acquisitions as well as developing our brand strength as leading advisers in the commercial and prime residential markets.
“2012 has started well, albeit that we anticipate a continuation of challenging transaction market conditions in the first half, with greater market confidence emerging to improve financial performance during the second half of the year.
“We anticipate further recovery in the US, relative stability in the prime central London residential and commercial businesses and continued growth in fund management. In Asia, we expect a somewhat reduced volume of transactions but the impact of this should be largely mitigated by further growth in China and in our non-transactional businesses across the region.
“In Continental Europe it is not yet possible to see through to a sustained recovery; however, assuming the macro-economic situation remains largely unchanged, we expect to improve performance in the region in the current year.
“Subject to unforeseen circumstances, we anticipate performing in line with expectations for the full year.”
bridget.o’connell@estatesgazette.com
