Savills PLC (LSE:SVS) reported 9% revenue growth to over £1bn for the first half but saw a drop in profit and cautioned real estate markets may slow as interest rates rise.
Revenue climbed to £1.04bn in the six months ended 30 June 2022 from £932.6mln in the same period the year before, with transaction advisory revenue rising 14%, the international real estate advisor said in its earnings release.
Underlying pre-tax profit fell to £59.2mln from £66.1mln, in line with the company’s expectations, as staff costs and discretionary expenses rose.
Commenting on the results, chief executive Mark Ridley said: “Despite staff cost inflation and the anticipated increase in discretionary costs, we have performed well so far this year, in line with the board's expectations.”
Commercial transaction revenue increased 26% with growth across all regions during the period, but residential transaction advisory revenue fell by 11%.
Savills said the UK residential markets performed well, although activity levels fell as anticipated.
The company upped its interim dividend to 6.6p from 6p.
Net cash stood at £149mln as at 30 June, up from £106.7mln a year earlier.
Ridley said global real estate markets are beginning to adjust to rising interest rates driven higher by inflation.
“We expect that process to continue through the second half of the year,” he noted.
“At this stage it is too early to predict with any accuracy the potential impact of the political and economic environment on real estate transaction volumes globally, although clearly the risk is towards a short-term reduction in activity as markets adjust to, inter alia, rising debt cost.
“Notwithstanding this risk, given our performance to date and having previously taken a cautious view of likely transactional performance in 2022, at this stage the board's expectations for the year as a whole remain unchanged," Ridley concluded.
Shares fell 1.78% to 1,104.00p in early trade.