Savills profits fall despite property boom

The buoyant Asian business saw underlying profits rise 58 per cent to £6.8m, but this was in stark contrast to commercial property markets in the UK, Europe and the US, which remained weak. Chief executive Jeremy Helsby describes the first half of the year as "the worst market conditions I've ever experienced." Activity picked up in the second half, but he remains cautious in outlook, adding,"it is not clear if the recent recovery can be sustained." The US and European commercial businesses are still loss-making and falling transaction volumes across the whole business have pushed down revenues, although £62m of cost savings has softened the blow.

Last year Savills' upmarket residential arm was the star performer, with a resurgent property market in London and the south east behind the surge in profits from £2.8m to £11.8m. Although rapidly rising prices in the UK commercial property investment market are generating lots of headlines, there are still very few transactions and unless volumes return, fee income will remain weak.

Revenues generated in Asia now account for 38 per cent of group turnover (up from 33 per cent a year ago) and the majority comes from non-transactional activities. The biggest of these business lines is property management. Savills now manages 900m sq ft of property around the world, with just over half of this space in China. To put this in context, the size of the City of London's property market is around 80m sq ft.

Broker Oriel forecasts full year pre-tax profits of £17.5m and adjusted EPS of 14.8p.

.

More analysis of company results

More articles and share price data on Savills