JLL has posted declines in its full-year earnings and revenue, while crediting its “resilient” business lines for offsetting sluggish transaction activity.
Group-wide revenue was broadly flat for the year ending 31 December, edging down by 0.5% to just under $20.8bn (£16.4bn). Full-year fee revenue was down by 11% at $7.4bn.
However, JLL said its divisions with “resilient revenues” generated 5% fee growth for the full year. Those segments included its workplace management and property management divisions.
Adjusted EBITDA for the year dropped by 40% to $736.7m. Operating income dropped to $576.5m for the full year, compared with $868.1m in the previous year.
The agent made a full-year equity loss of $194.1m during 2023, compared with $51m in equity earnings in the previous year.
How capital markets fared
Revenue from the capital markets division dropped by 29% to $1.8bn during the full year, and by 13% to $537.1m in Q4.
JLL said the dip reflected a meaningful drop in transaction volumes year-on-year on the back of the rapid rise in interest rates and elevated uncertainty. The investment sales and debt and equity advisory segments were worst hit.
The agent said it was a solid performance for capital markets against the “lowest fourth-quarter investment sales market volumes since 2011”.
In the markets advisory business, revenue fell by 7% to $4.1bn for the full year but inched up by 1% to $1.2bn during Q4. Full-year fee revenue was down 11% to nearly $3bn, while its Q4 equivalent reduced by 3% to $895.6m.
The US office sector drove a 5% decline in leasing, JLL said. The top-line movements in markets advisory reflected a decrease in average deal size across “nearly all” asset types.
Within the markets advisory segment, the property management division grew its revenue by 12%, which JLL attributed to portfolio expansions, particularly in the US. It also attributed the increase to incremental fees from interest-rate sensitive contract terms in the UK.
Signs of recovery in Q4
Revenue over the final quarter of the year amounted to $5.9bn, up by 4% year-on-year, but fee revenue fell by 2% to $2.2bn during the same three months.
Adjusted EBITDA during Q4 amounted to $306.4m, down by 9% on the same quarter in 2022.
JLL said its fourth-quarter margin reflected lower transaction-based revenues and “unrealised” investment losses associated with certain JLL Technologies portfolio investments. However, those were partially offset by growth in “resilient” revenue and the impact of recent measures to mitigate costs.
The workplace management division, which sits within the work dynamics segment, was the strongest performer in Q4 after posting a 17% rise in fee revenue.
JLL chief executive Christian Ulbrich said the results reflected “strong growth within our resilient business lines in the face of the market-wide pullback in transaction activity and elevated geopolitical uncertainty”.
“With a focus on operating efficiency, we drove improved cash generation while continuing to invest in our platform,” Ulbrich added.
“As business confidence globally begins to improve alongside greater stability in interest rates, we expect transaction activity will pick up over the course of the year. Our global platform, industry insights and people uniquely position us to seize significant growth opportunities across the commercial real estate industry in the coming years while continuing to provide exceptional service to our clients.”
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