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DTZ slashes dividend

Created:
14 July 2008
Written by:
Claer Barrett

Property services firm DTZ has cut its dividend in the face of uncertain global property markets, noting that 'general recessionary pressure' is dampening property markets around the world.

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Following a gloomy trading update from rival Savills, DTZ revealed that pre-tax profits had been hammered by exceptional charges of £15.1m, including £2.5m spent integrating the £60m acquisition of retail specialist Donaldsons, and an £11.7m write-down on its underperforming North American business.

The firm had already come under fire in the US, after losing its deal-sharing alliance 'tenant rep' specialist Staubach to rival Jones Lang LaSalle last month. "We will look to building our capacity in North America, but now is not the time to pour capital into the market," said chief executive Mark Struckett, adding that Staubach was "useful but not fundamental" to servicing US clients.

But strong markets in Asia and an 83 per cent rise in revenue from professional services such as property valuation - where DTZ is benefiting from a downturn-driven 'flight to quality' - helped the company achieve 15 per cent organic turnover growth.

Broker Brewin Dolphin expects pre-tax profits of £20m and EPS of 16.5p in 2009.

DTZ (DTZ)
ORD PRICE: 164p MARKET VALUE: £97.4m
TOUCH: 160-164p 12-MONTH HIGH: 569p LOW: 160p
DIVIDEND YIELD: 3.96% PE RATIO: na
NET ASSET VALUE: £1.85* NET DEBT: 29%

Year to 30 Apr Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2004 166 11.0 10.8 6.50
2005 194 20.6 24.8 7.50
2006 232 29.7 37.9 9.75
2007 310 41.8 49.4 11.50
2008 446 5.56 -7.65 6.50
% change +44 -87   -43

Ex-div:13 Aug

Payment:12 Sep

*Includes intangible assets of £152.5m, or £2.57 a share

Click here for a guide to the terms used in IC results tables.

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SHARE TIP UPDATE:

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DTZ shares are already down 14 per cent on our recent sell tip (190p, 4 July 2008) and, with global property markets likely to get worse before they get better, our advice still stands. Sell.

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