Foxtons this morning warned that after the referendum, challenging conditions are likely to persist for the rest of this year, impacting on revenues and profits.
In a statement to the stock market this morning, it said: “The run-up to the EU referendum led to significant uncertainty across London residential markets and the decision to leave Europe is expected to prolong that uncertainty.
“Whilst it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise.
“As a result, the challenging conditions we referred to in our April 2016 trading update, which have impacted recent property sales volumes, are now likely to continue for at least the remainder of the year. We therefore expect full year 2016 Group revenues and Adjusted EBITDA¹ to be significantly lower than prior year.
“2016 first half Group revenue is now expected to be slightly below prior year with a lower Adjusted EBITDA¹ margin in the region of 20% primarily due to subdued sales volumes and the costs associated with recent investment in our branch network.
“We will provide a further update on the market outlook with our interim results on 29 July 2016.”
Nic Budden, CEO, said: “Whilst we had a strong start to the year, we said in our Q1 update that we expected the first half to be challenging ahead of the EU referendum. Since then recent sales volumes have been slow as uncertainty and higher Stamp Duty has led many buyers and sellers to sit on their hands.
“The result of the referendum has increased uncertainty and is likely to mean that these trends continue for at least the remainder of the year.
“Looking further ahead, we remain confident of the attractiveness of London property sales markets and our strategy to focus on the outer London mid-market segment. Furthermore, our strong lettings business provides strong downside protection.”
Comments (4)
Well at least Foxtons will be making a profit at the end of the year, unlike PB.
Yes indeed .Paddy One thing in Foxtons favour is that at least they have been adding offices incrementally not that its going to stop the SP tanking This isi of course Unlike Countrywide who have been getting the cheque book out and gobbling up turnover at prices paid on past performance achieved by individuals unlikely to be staying on the premises long .Think DTZ and Donaldsons a few years back where turnover has a nasty habit of disappearing quite quickly
Lets face it Foxtons like most listed agents with Savills being a notable exception are a bit like politicians they always end in failure when the main equity holders are no longer running the business At the street fighting end the big fee earners are never going to be satisfied with some limited share options they move on with clients in tow Life is certainly not going to be a piece of cake for Bricks either trying to extract a fee on the off chance you can sell a house in a difficult market Likely outcome with Foxtons is that the price drops to a level where the management think its worthwhile to garner themselves for a buyout and the whole merry dance starts again ” All is for the best in the best of all possible worlds “
In short:
“Something happened. That Something is going to make our Somethings change for Some Time. However, that Something is only for now, and our Somethings will be back to normal Some Time.”
Please apply the above to everything that has ever happened.