JLL’s pre-tax profit tumbled by 77% in the first half of 2020 to $38.4m (£29.2m) compared with 2019 as the pandemic disrupted the agent’s operations.
Adjusted EBITDA also sank by 38% to $199m. JLL said delays to leasing and investment transactions meant its transaction-based businesses were the “most impacted” by the outbreak of the virus.
However, this was offset by workloads increasing in its corporate solutions and other annuity businesses as clients sought to ensure critical operations were maintained and the need for the development of back-to-work measures.
JLL reported that in response to the ongoing disruption it had increased its cost mitigation plans across most of its businesses and had taken advantage of various government relief programmes, which helped it retain more jobs and provided more financially flexibility.
This included nearly $14m in government relief across EMEA, which stemmed mainly from government furlough programmes.
The firm reduced its net debt by $450m to $1.1bn by the end of June, which was due to cash used by its operating activities dropping from $483.1m in 2019 to $44.7m over the first half of 2020.
However, following 30 June its net debt increased by $180m. JLL said this stemmed from residual borrowings on the firm’s credit facility and its purchase of HFF in Q3 2019.
“Next to the safety of our employees, we have focused our complete attention towards serving our clients during these challenging times, and maximising the generation and preservation of cash,” said JLL chief executive Christian Ulbrich.
“Driving a $450m reduction to net debt this quarter reinforced our financial strength and liquidity. We are well-positioned to withstand the impact of the pandemic and then resume our growth journey.”
Revenue for the group nudged down 4% to $7.77bn for the first half of 2020, while fee revenue fell by 7% to $2.75bn. Leasing fee revenue was down by 23% to $819m and basic earnings per share fell from $2.88 to $0.40.
Across EMEA, JLL recorded an operating loss of $53.9m compared with a loss of $30.7m in 2019 with fee revenue down by 17% to $578.5m.
The worst-hit parts of the business were its property and facility management, which saw its fee revenue drop by 27% to £144.1m, and leasing division, which fell by 19% to $92.5m.
JLL reported that its transaction-based revenues were “especially” lower in the UK and France.
It attributed the drop in its property and facility management business in part to it bringing in $20m less in its UK mobile engineering business due to work delays from office closures.
Adjusted EBITDA also fell to $34.4m and JLL reported that its adjusted EBITD margin for the second quarter was -8.8% compared with 2.5% last year.
Its decline in profitability was primarily due to transaction-based revenue declines and losses on three contracts that were nearing completion or termination.
LaSalle, meanwhile, reported a 96% fall in adjusted EBITDA from $59.9m in 2019 to $2.4m for the first half of 2020. Operating income also fell by 33% to $28.3m and fee revenue dropped by 11% to $193.6m.
JLL said valuation declines in its assets under management and a decline in incentive fees due to an outsized performance last year had offset solid advisory fees.
Adjusted EBITDA margin for the second quarter was 28.2% compared with 33.7% last year, which was largely attributable to the lower incentive fees.
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