Foxtons’ share price fell heavily yesterday after it issued a profits warning because of “sharp and recent slowing of volumes” in the London property market.
The firm said it expected sales volumes in the second half of this year will be “significantly below levels during the same period last year”.
Foxtons posted revenue of £39.9m for the three months to the end of September, down from £41.1m during the same period last year.
The company also said that in the three months to September 30, sales commissions fell 7.8% to £16.4m, down from £17.8m a year ago, and lettings revenue was flat at £21.9m.
The company blamed a combination of economic uncertainty, tighter mortgage lending conditions, and “mismatches between the price expectations of buyers and sellers”.
Foxtons now expects this year’s ebitda (earnings before interest, tax, depreciation and amortisation) to fall below that of last year.
For 2013, it reported ebitda of £49.6m. This year’s earnings will be below that.
However, Foxtons stressed that it is far from losing money.
Nic Budden, chief executive, said the firm will press on with its “clear strategy, centralised business model and steady roll-out programme”.
He said: “Foxtons remains highly profitable, cash generative and debt free, and therefore well positioned to deliver further cash returns to shareholders, building on the £28.1m of ordinary and special dividends paid since our IPO.”
Foxtons floated on the London stock market in August last year at 230p.
Yesterday, its shares finished 40p down at 165p, a fall of almost 20%.
Foxtons’ announcement that it had caught a bit of a cold meant that other property shares also sneezed.
Most of the property shares that initially dropped sharply picked up during the day – but still finished down.
Savills’ shares ended 3.31% down and Countrywide was down 3.85%.
* The profits warning comes despite data showing the huge success that Foxtons undoubtedly is.
According to statistics compiled by newly launched agent comparison site GetAgent and released to Eye yesterday, over the last six months Foxtons has sold approximately 4,005 properties at an average asking price of £681,323 with a turnaround time of 47 days.
London’s property market may not be as hot today as it was over the first six months of 2014.
However, Foxtons, with 52 branches [51 area-focused branches plus one dedicated to new homes] out of London’s total of 6,470 estate agency branches, certainly has a large presence – and impact – in the capital.
The firm currently has 4,350 live, available listings (ie, excluding properties under offer) on Zoopla and 4,047 on Rightmove, which accounts for approximately 7% of London property marketed online today.
(Data accurate as of 3pm yesterday, Thursday October 23.)