Savills’ bonus pool is expected to shrink this year after a slowdown in transactions hampered parts of the business.
Last year the agent paid out a bumper £122m in “performance-related pay” after pretax profits nearly trebled from £13.5m to £36.8m in 2010.
However, group chief financial officer Simon Shaw said that the slower transactional market in 2011 meant the “quantum” of the firm’s bonus pool would be “reduced year-on-year”.
The comments came as the group delivered a 9% increase in pretax profit to £40m for the full year to 31 December 2011, on the back of a 7% rise in revenue to £721.5m.
The strong overall performance came despite a tough year in continental Europe as sluggish transaction volumes pushed the region further into the red.
The agent posted a 14% decline to £26m in commercial revenue on the Continent, while losses almost doubled to £8.8m.
The region was the poorest performing overall, with a loss of £9.6m across all sectors – up from a £6.2m deficit in 2010.
Group chief executive Jeremy Helsby said that having shut offices in Barcelona and Rome in 2011 he did not expect any more closures this year “barring unforeseen circumstances”.
“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,” he said.
Geographically, the agent fared well in the UK, with revenue of £352.3m and a profit of £33.7m – up from £27.4m in 2010 – as the booming London residential market continued to drive profits.
Domestic revenue from commercial transactions remained broadly level at £47.9m, but a “significant slowdown in activity” in Q4 and investment such as its £4m purchase of Gresham Down saw profits dip from £7.7m to just £4.6m in 2011.
Asia Pacific showed signs of cooling as commercial transactional activity began to slow, resulting in a marginal fall in profits to £27.7m.
In the year ahead, Helsby said the firm anticipates “a continuation of challenging transaction market conditions in the first half, with greater market confidence emerging during the second half of the year”.
He added that the firm was still expected to perform in line with analysts’ 2012 expectations of £49m-£55m pretax profit.
