Savills’ H1 revenues top £1bn, but staff costs eat into profits
Savills has raked in revenues of more than £1bn for the first six months of the year, but staff costs are eating into profits.
The agent said the 11% lift on the same period last year, to £1.037bn, came as pre-tax profits shrank from £63.3m to £50.4m.
Group 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.”
Savills has raked in revenues of more than £1bn for the first six months of the year, but staff costs are eating into profits.
The agent said the 11% lift on the same period last year, to £1.037bn, came as pre-tax profits shrank from £63.3m to £50.4m.
Group 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.”
Transaction advisory revenues were up 14% to £413m, while commercial transaction revenue increased 26%, with growth across all regions. UK commercial transaction fee income increased 44% to £55.6m, from H1 2021’s £38.5m, which resulted in an improved underlying profit margin of 17.8%, up from 2021’s 13.5%.
However, residential transaction advisory fell by 11% as activity slowed from “the abnormally positive market conditions of 2021”.
Meanwhile, Savills Investment Management saw its AUM rise by 9% to €26.5bn (£22.8bn).
But there is a significant gap between the rising revenues and the dwindling profits.
The firm’s results stated: “Profits were impacted globally by significant growth in staff costs after two years of effective stasis.”
It added that “other expense lines including marketing, events, travel and entertainment increased by between 50% and 115% period-on-period”, as the business returned to pre-pandemic levels of activity.
Despite not stating so explicitly, it seems likely that Savills will join other agents – CBRE, Cushman & Wakefield and JLL this week – in looking to cut costs and limit new hires.
Ridley added: “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.”
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