Foxtons this morning announced a huge tumble in profits for the first half of this year, down by over 42%. It also cancelled its special dividend.
Pre-tax profits of £10.5m fell from £18.1m for the same period last year.
Adjusted earnings before costs (EBITDA) were hit, down from £20.5m last year to £13.1m.
Group revenue was also down in the six months to June 30, at £68.8m, compared with £71.1m last year.
Without a surge in property sales in March ahead of the introduction of the Stamp Duty surcharge, the results would have been worse. However, the crash in sales during the second quarter of this year was marked – sales revenue in that quarter was £11.4m, down from £18.2m in the same quarter of last year.
Foxtons earned more per sale and per letting than last year, but there were quite simply fewer properties in both sectors. It earned £13,522 per sale, up from £13,057 last year, but sales were down to 2,314 from 2,578. It earned £3,573 per lettings unit, up from £3,252, but the number of letting units was down from 10,310 to 9,127.
Chief executive Nic Budden said: “Uncertainty surrounding the EU referendum led to slow residential property markets in London during the first half of the year.”
He added: “We believe that the overall level of property sales transactions made in London during the first half of the year is substantially down on last year.”
He said that following the referendum there is likely to be a “prolonged period of further uncertainty and we do not expect London residential property sales markets to show signs of recovery before the end of the year”.
Despite Foxtons’ woes, it opened five new branches during the period, bringing its network to 63, and will open two more branches during the second half of the year.
Budden said: “We remain committed to our goal to reach 100 branches across greater London.” However, he said the immediate pace of growth would be slowed down.
Analyst Anthony Codling of Jefferies said: “Foxtons first half profits fell by more than 42% to £10.5m and the special dividend has been cancelled, which in our view reflects falling transaction volumes and perhaps the fact that cash balances at the end of June 2016 were down 80% to £4.1m.
“Expanding in a contracting market is proving even too difficult for Foxtons and growth plans are being reviewed.
“The dividend cut, whilst not welcome is a reflection of the negative impacts of operational gearing during a downturn.
“Perhaps a sign of the times, but even with first half profits of £10.5m the stock market value of Foxtons is less than that of the challenger low cost estate agent Purplebricks, which has yet to turn a profit, recently delivering a full year loss of £11.9m.”
Comments (4)
Foxtons opened up in my town earlier this year, started with a bang because of their usual high price strategy and 0% fees for the first few months. Since the 0% fees ended, they’ve listed 4 houses since April.
They do absolutely nothing which is cutting edge or better than your local independent agent but due to their stupid high spec offices they seem to think that justifies their 2.5% fees.
Who’s NEXT?
Rightmove ?
Zoopla?
It would be spectacular to see the tragedy of fall in our lifetime. End of the day it’s the Brexit which is going to end our fairytale style lifestyle.
I wont be surprised to see Mr Jonson is going to door to door of EU leaders and begging for mercy!
Yet It’s not too late to stop this madness and Mrs May should announce 2nd referendum to bring things under control and give us second chance to live with actual British pride and dignity.
Not that I think they will call a 2nd referendum but just suppose they did – and the leavers won again. Would you call for a 3rd, and a 4th and so on until you got want you wanted?
Its done, eventually we will set article 50 in motion so we just need to learn how to live with it and adapt.
A quick look at this figures demonstrate how important foxtons to maintain their premium pricing model. That could be interesting as supply falls.
but a loss of 264 sales across 58 branches is hardly an emergency considering Th conditions of the London Market . Some of their local competitors may have been hit similar or worse.