Savills expects to deliver profitability this year

Savills has said it is confident it will be able to continue its growth strategy and deliver a “profitable performance” this year. However, the agency stopped short of providing “meaningful guidance”, stating that results for the year will depend on the recovery speed of property markets during the second half of the year. Savills’ share price fell by around 2.5% to 809.5p in the hours following the agency’s trading update. Without disclosing figures, Savills said its half-year net debt will be “substantially” lower than it was in June 2019, when it stood at £139m. The agency highlighted a significant reduction in transactional activity as a result of Covid-19 during the six months ending June 2020. It highlighted “resilient” performance in the UK, despite transactional activity declines during the lockdown, largely attributed to its consultancy and property management offerings. Since the recent lifting of estate agency restrictions in England, Savills has noted “substantial increases” in activity within the residential transaction business, although it remained “too early” to determine whether this will correlate with pent-up demand during lockdown. In Asia, the agent highlighted “clear signs of recovery” in activity, particularly in Korea, mainland China and Hong Kong, albeit from a low base. However, its US operations, which rely heavily on leasing activity, were impacted by delayed occupier decisions on office space. In continental Europe and the Middle East, where Savills is more dependent upon transactional activity, its local operations were boosted by its pipelines in Germany, Spain, the Netherlands and Belgium, which collectively lessened the blow from reduced transaction volumes. More than 90% of its offices around the world have reopened, either being fully staffed or operating on rota systems. The majority of its employees have returned from furlough. To maintain staffing levels, the agent has undertaken measures including: 20% senior management salary cuts for 2020; reduction in discretionary expenditure; reduction and deferment of capital expenditure except for data projects; cancelling its 2019 final dividend and postponing future payments; and limited acceptance of government support. Mark Ridley, chief executive (pictured), said: “We continue to ensure that we have the appropriate balance in our business through the growth of our less transactional service lines. We have a strong balance sheet and are taking steps to mitigate the impact of the pandemic across our business. “Although the short-term outlook remains difficult accurately to predict, we are confident in the strength and resilience of our global, diversified business.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette