The FTSE 250 estate agent had previously warned of the decline in a trading update back in January, blaming “macro-economic and political uncertainties across the world” as Brexit and the US-China trade spat all weighed on investor demand for real estate and company expansion.
Mark Ridley, the company’s chief executive, said that while the impact of the global conditions was “difficult to predict”, the company would retain its current expectations for 2019 of flat growth year-on-year.
In its full-year results for the year ended 31 December 2018, Savills reported underlying pre-tax profits of £143.7mln, up 2% on the prior year, while revenues jumped 10% to £1.76bn.
The profit figure was slightly higher than forecasts from analysts at UBS, who had expected underlying profits of around £141mln.
Savills also upped their final dividend to 26.4p per share from 25.55p in 2017, taking the total dividend for the year to 31.2p from 30.2p.
Growth was lifted by a strong performance in the group’s property management arm, where revenues were up 14%. Meanwhile, its transaction advisory and consultancy revenues were up 9% and 8% respectively.
However, the company said that the macro uncertainty had dented its performance in the year, with adverse currency movements effectively wiping £1.3mln off its underlying profits and £20.7mln from its revenues.
Broker downgrades to ’hold’ following share surge
In a note to clients, analysts at broker Peel Hunt downgraded the stock to ‘hold’ from ‘buy’ on the back of recent growth in the share price, which has risen around 31% from the start of the year to the last close on Wednesday.
Analysts said the shares at 923.5p were trading in line with their target price of 925p, however, they added that the global political and economic outlook was “doing little to help visibility” on the company’s transactional activity.
Outlook could “shake the foundations” of wider industry, says analyst
Russ Mould, investment director at AJ Bell, said that as Savills was seen as “a bit of a bellwether for the sector”, its prediction of a transaction fall amid the macro uncertainty could “shake the foundations of the wider industry”.
In early trading Thursday, Savills shares were down 8.3% at 847p.