Savills’ profit has slumped by 72% as the firm “reduces expectations” for the year ahead.
Chief executive Mark Ridley said: “Our range of expectations for the year as a whole has reduced somewhat. We do, however, continue to anticipate a significant improvement in volumes of activity through the balance of the year and into 2024.”
Group underlying profit for H1 2023 was £16.3m, down from £59.2m for H1 2022. The fall was led by a steep drop in transaction advisory, which swung from a £22.7m profit for H1 2022 to a £17m loss. Consultancy profit also dropped by 55% to £7.2m, while investment management fell by 32% to £7m.
Revenue was also down, by a total of 3% to £1.01bn, again led by a fall in transaction advisory, which dropped 20% to £328.7m.
Revenue for the UK fell by 7% to £409m, while profit for the UK was down 34% to £31.6m.
Savills said that globally capital transactions remained very constrained throughout the period with market volumes declining by about 60% year-on-year and around 46% below the five-year average.
UK transaction advisory revenue fell by 28% to £109.1m over the period. UK commercial transaction fee income fell by a third to £37.5m, with a significant reduction in both investment and leasing activity.
Capital transactions for the UK remained “very constrained”, with market volumes declining by 54% year-on-year and 38% below the five-year average.
However, other territories fared worse. Asia Pacific profit fell from £18m in H1 2022 to just £1.9m, with the transaction volume of commercial properties falling by 30% year-on-year, and transaction advisory revenue falling by 38% to £50m. Continental Europe and the Middle East saw last year’s £1.7m loss become a £12.3m loss.
The firm was keen to point out that there had been “good growth” in the less transactional service lines, with property and facilities management revenue growing by 16% to £435.5m, and profit up 18% to £20.1m.
Ridley said: “We are seeing some positive signs in markets such as the UK and continued strength in certain Asia Pacific markets, including Japan; in Continental Europe and mainland China we now expect reduced market volumes to continue through much of the year.”
He added: “In many locations we are carrying very strong capital transaction pipelines awaiting the market conditions for launch. In prolonged uncertain conditions, it remains challenging to predict accurately the timing of individual market recoveries.”
Savills also confirmed that Stacey Cartwright will succeed Nicholas Ferguson as chair when he retires at the end of the year.
Cartwright is currently senior independent director and has been on the board since 2018. She was previously CEO and then deputy chair at Harvey Nicholls.
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