Foxtons Group PLC (LON:FOXT) opened lower on Wednesday morning after the London-focused estate agent blamed Brexit and changes to stamp duty for a sharp fall in profits.
The company saw revenues drop more than 12% to £132.7mln in the 12 months to 31 December 2016.
Sales revenues in particular took a beating due to a “marked step down in activity in the second half”, plummeting 23% to £55.5mln.
That had a knock on effect on profit which slumped by more than 50% to £18.8mln (2015: £41mln).
To add insult to injury, Foxtons said 2017’s results could fall even further should things not pick up between now and the end of the year.
“Last year's London property market was severely impacted by an unprecedented sequence of events with changes to stamp duty and the EU referendum vote leading to a substantial reduction in property sales transactions,” said chief executive Nic Budden.
“We expect trading conditions to remain challenging throughout 2017. Should current sales activity continue through the remainder of this year, it is likely that 2017 sales volumes will be below last year.”
If there was a small consolation for investors, it was that lettings weren’t nearly as badly affected as sales, while mortgage revenues actually increased.
Revenue from lettings remained “resilient” and only slipped 1% to £68.3mln, while mortgage revenue was up by 7% year-on-year to £8.9mln, driven by higher volumes in the first half ahead of the stamp duty changes.
During 2016, the average price of a home sold through Foxtons was £568,000, up from £550,000 a year earlier.
As of February, Foxtons has 67 branches across the capital and the Home Counties.
‘It’s tough out there,’ says broker
The estate agent wasn’t getting any let-up from City brokers today either.
Peel Hunt was particularly scathing and repeated its ‘sell’ recommendation for Foxtons as well as its bearish 80p price target.
“The outlook hasn’t improved, with volumes for 2017 expected to be lower again and a lettings fee ban due to come into force at some point in 2018,” said analyst Gavin Jago.
“We don’t expect any profit growth over the next couple of years [and] we don’t see any near-term recovery in the investment case. Sell.”
Shares were down 1.3% to 97p in early deals on Wednesday.