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Savills makes good start to 2018 as annual profit rises
Savills said it made a good start to 2018 but highlighted market uncertainty as the estate agent and property adviser posted a 3.5% rise in underlying annual profit.
Underlying profit for the year to the end of December rose to £140.5m from £135.8m helped by currency movements. Stripping out currency swings, underlying profit was £136.6m.
Statutory pre-tax profit rose 13% to £112.4m or £109.6m in constant currency. The company increased the annual dividend by 4% to 30.2p a share.
Savills said it benefited from strength in commercial markets, geographical diversity and a resilient performance by its UK residential business. The company has an international network of more than 600 offices and makes 61% of its revenue from overseas operations.
Savills' Asian business, which makes up 35% of revenue posted a 31% increase in underlying profit to £55.6m while profit rose 6% to £76.5m at the UK business. That performance more than made up for profit more than halving to £7.8m from £18.9m in North America and a 17% drop to £11.2m in continental Europe.
In Asia high-end sales in Hong Kong and more project sales helped drive up residential revenue while Hong Kong commercial property remained attractive to Chinese investors.
UK residential revenue rose 4%, helped by higher prices and slightly higher charges, offsetting lower transactions. Savills appears to have weathered the weakening UK property market better than London-focused Foxtons, which reported a plunge in annual profit in February.
The US business was affected by deferred large government-related transactions, caused by uncertainty, and money spent on assembling a capital markets team in New York.
Chairman Nicholas Ferguson said the current financial year had started well but he noted risks to business activity amid economic and political uncertainty.
Ferguson said: "We have made a solid start to 2018 with a pipeline of business carried over from last year in many markets, although this is against the backdrop of heightened market uncertainty, geopolitical risks and rising interest rates. We anticipate some tempering of the strong transaction volumes of recent times in some markets; however, at this early stage in the year our expectations for 2018 remain unchanged."
Savills shares were little changed in early trading, down 0.6% to 972.5p at 08:17 GMT.