Decline in profits at property consultants

PROPERTY CONSULTANCY f irm Savills yesterday reported a 4% fall in pretax profits as operations were hit by the eurozone crisis and a subdued international housing market.

However, the company — which has its UK headquarters in London but operates regional offices in Perth and Brechin — saw group-wide pre-tax profits dip marginally in the first six months of this year.

The firm suffered a £3.5m loss in its Europe operations in the six months to June 30 — a narrowing of the comparable £4.7m loss in 2011 — while profits declined in the Asian operation by 14% to £10.6m.

The company’s American arm saw profits double to £1m in the period.

Core UK revenues, helped by fee incomes from house and property sales up 5% to £45.7m, increased by 7% in the period to £170.9m while pre-tax profits were almost static at £16.3m.

The average London transaction value — buoyed by premium property sales in the capital’s most desirable areas — remained broadly unchanged at £2.74m.

Meanwhile the average rural transaction value rose by 7% to £1.1m.

Although overall group revenue rose by 5% to £353.3m, underlying pre-tax profit fell from £20.6m over the same period in 2011, to £19.7m for this year.

Meanwhile, several new contract wins within the UK, Hong Kong, China, Korea and Vietnam drove group property and facilities management revenues up by 12%, increasing the total area under management by the group by 29% to 1.57bn square feet.

Savills also reported a strong growth across ‘non-transactional’ arms of its businesses, including consultancy and property management, which now accounts for more than 60% of group revenues and profits.

Jeremy Helsby, group chief executive of Savills, said he expected the European marketplace to remain unsettled but losses had been stemmed.

He said: “I am pleased to report a better first-half performance than we anticipated as a result of the continued growth of our consultancy and property management businesses around the world, and the strength of our businesses in key transactional markets in the UK and Asia Pacific.

“In addition, despite continued deterioration of European transaction markets, we have materially reduced losses in our Continental European businesses whilst continuing to invest in our core teams.”

Looking to the second half, Mr Helsby said he saw no material change in the overall outlook for the business.

“In Asia we anticipate an improvement in activity levels in our principal markets,” he said.

“In the UK, the combination of the seasonal summer quiet period and the London Olympics means that it is still too early to predict the trading environment from September onwards.”

Shares in Savills rose 3.00 to 380p.

Jeremy Helsby