Countrywide has reported pre-tax profits down by a quarter year-on-year, as it warned further falls are likely as the property market in London stalls following the EU referendum.
While revenues during the first half of the year were up 9 per cent to £370m - compared to £339m during the same period last year - earnings before interest, taxes, depreciation and amortisation fell 8 per cent to £38m - from £41m last year.
Adjusted profit before tax fell to £22m, down 25 per cent from £29m in 2015.
The UK’s largest lettings and estate agency group forecast that it would not be able to match the £113m adjusted Ebitda level seen last year.
Chief executive Alison Platt put this down to a property market slowdown in May and June surrounding the Brexit vote, which caused many transactions to stall.
“We saw a slowdown in our retail and London residential businesses and, since the EU referendum result this has become more marked in London, the south east and expensive prime markets,” she commented.
“The rest of the country has fared somewhat better and our lettings business and mortgage trends have been largely unaffected.”
There was also a slowdown in commercial transactions, but consultancy revenues remained stable.
Ms Platt said this period of uncertainty will inevitably impact the level of transactional activity in the second half of the year. “Notwithstanding this, and following the significant investment we made in the business in the second half of 2015, we continue to make real progress in executing our strategy.”
Merger and acquisition activity was “paused” at the end of the first quarter and Countrywide stated it will continue to adopt a cautious approach to acquisitions in the current environment, as the focus shifts to growing organically.
Completed mortgages at Countrywide were up 30 per cent by volume and 44 per cent by value year-on-year, according to the update.
The financial services business saw revenue 19 per cent ahead of 2015 at £42.9m, generating pre-tax earnings of £10.1m - up from £7.1m during the first half of last year.
Overall gross mortgage lending was about 20 per cent ahead of the fist six months of 2015, while the value of mortgage applications was 14 per cent higher than last year.
Planned expansion of the financial services business continued with the acquisition of The Buy to Let Business and The Mortgage Bureau.
“Whilst we expect mortgage activity to be relatively steady in Q3, we continue to support the market expectation that total gross mortgage lending will finish at approximately £237bn, a 10 per cent increase year-on-year,” read the statement.
peter.walker@ft.com
