Estate agent Foxtons’ earnings crashed last year, as it faced “challenging conditions” in the capital.
In a trading statement that is the latest in a series of gloomy updates the company issued throughout 2017, the London-based firm said it expects its earnings before interest, taxes, depreciation and amortisation for last year to come in at just £15m, a 42pc drop from its £26m earnings in 2016. This was in line with expectations, and the company's share price was up 3.5pc in early trading.
The company said that decline was driven by a fall in sales in the first quarter of 2017, compared to the same period of 2016, when there had been a “surge” in sales ahead of the introduction of the stamp duty premium for buy-to-let properties and second homes.
Foxtons said that it would also be recognising a £2m hit as it restructures. However, analysts at Peel Hunt said that any benefits of cost-cutting measures would be offset by a forecast £3m hit to profits from the Government's letting fee ban which comes into practice in 2019.
They added that "the outlook remains challenging with little or no uplift in transactions expected in 2018". Its share price fell 20pc in 2017, is already down 10pc since the beginning of the month. The update comes a day after the chief executive of Countrywide, Alison Platt, stepped down after the estate agency issued two profit warnings in three months.
The group’s revenue from property sales last year was down 24pc at £42m, while the lettings business was more stable. Lettings revenue was £66m last year, compared with £68m in 2016. The decline was driven by “downward pressure on rents across the market throughout the year”, Foxtons said.
The group’s mortgage broker, Alexander Hall, generated about £9m in revenue for 2017, which the company said was “broadly in line with the prior year”.
Nic Budden, chief executive of Foxtons, said that the company expects a challenging year ahead and it had “strategic initiatives” planned. It will present its full-year results on February 28.
Source: The Telegraph
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