TIDMSVS
RNS Number : 3084Z
Savills PLC
11 January 2024
11 January 2024
SAVILLS PLC
("Savills" or the "Group")
Year-End Trading Statement
Performance in line with expectations following prolonged
recalibration of markets
Savills plc, the global real estate advisor, publishes the
following trading statement in respect of the year ended 31
December 2023.
Throughout the year, real estate markets across the globe have
been challenged by significantly increased interest rates,
geopolitical events and, on a more asset specific level,
uncertainties over the future role of offices and the valuation of
existing stock in the era of sustainability.
These factors together with certain location-specific issues
significantly reduced transactional activity in Global markets
during the year. Those most affecting Group performance were: North
America, Greater China, Australia and Northern Europe, particularly
the largest markets of Germany and France. In addition, economic
uncertainty led to delays in corporate occupier commitments to new
leasing activity, particularly in the metropolitan office markets
of the USA and Northern Europe.
The value recalibration process has yet to catalyse market
liquidity, with the majority of lending banks continuing to extend
existing loan terms, albeit we are now starting to see lenders
beginning to exercise their security rights. This began to have a
positive effect on market activity towards the year end and should
be a catalyst for improved volumes in H1 2024.
The consequence of this was that global market conditions
remained extremely subdued for longer than originally anticipated
at the start of 2023, and resulted in the Group's Transactional
businesses experiencing a significant reduction in profits for the
year.
Savills strength across our Less Transactional service lines
continued to provide a resilient earnings stream, with the Group's
Consultancy and Property Management businesses performing well,
underpinning Savills overall performance. Consequently, the Group
expects that its full year performance for 2023 will be in line
with the expected range of outcomes*.
The speed with which individual investment markets are
recalibrating varies around the Globe; however, it is clear that
the UK prime Commercial market has re-priced to a point where it
represents value, particularly for assets with strong
sustainability credentials, for which there is significant occupier
demand. In addition our Prime residential business has performed
well, particularly in central London. As anticipated a year ago,
residential markets outside London were more subdued as volumes
reverted to more normal levels of activity after the abnormal
conditions during and post-pandemic. Indeed our UK business overall
delivered a very strong performance in difficult market
conditions.
Our European and North American businesses, being the most
exposed to Transactional service lines, felt the greatest impact of
prolonged uncertain market conditions, resulting in trading losses
for the year. In contrast the strength and diversity of our Asia
Pacific business enabled the Group to withstand significant
reductions in activity, particularly in both Australia and Greater
China, to post a profit, albeit reduced year on year.
Our Investment Management business traded in line with our
expectations although deployment of capital was inevitably reduced
given lack of price transparency in most markets. At the year end,
Savills Investment Management had significant investment "dry
powder" for both real estate equity and debt opportunities,
including Samsung having committed its first $1bn to support a
number of fund products.
As a result of prevailing market conditions during 2023, the
real estate services industry as a whole undertook a number of
rounds of significant cost reduction and reorganisation actions. In
line with our strategy during the Global Financial Crisis, as well
as more recently through the pandemic and supported by our strong
financial position, Savills continued to maintain its core bench
strength ensuring that we provided the highest level of service to
our clients throughout the year and remain well positioned for
market recovery. We did, however, review certain markets and
sectors where the anticipated time frames for market recovery
remain protracted. This resulted in selective restructuring in
certain transactional and support teams. Alongside this, we
continued to acquire businesses and recruit high quality talent in
markets which have become much more conducive to reasonably-priced
business development.
In the year ahead, challenging macro conditions are expected to
continue for some time; however most markets appear to be either
at, or past, the moment of peak uncertainty, with sentiment turning
towards reductions in the cost of capital being likely during 2024.
We expect re-financing driven activity and the sustainability
agenda to be positive for transaction volumes, and thereby price
transparency, in a number of markets. There also remain, for the
near term at least, questions over office utilisation in certain
locations, perhaps most keenly felt in the North American
metropolitan markets of the Eastern and Western seaboards.
Whilst it is too early to determine the 2024 outlook with
clarity, we believe that H1 2024 will see underlying market
improvements, which should set the course for broader recovery in
most of our markets during the second half of the year. This,
together with the benefit of our targeted restructuring programme,
should lead to substantive overall improvement in performance in
2024 and set the foundation for further improvement thereafter,
when the Group's performance should more clearly reflect our
globally diversified and strengthened position in many markets.
Savills intends to report 2023 full year results on 14 March
2024.
* The range of current analyst forecasts (excluding any
forecasts which have not been updated within the last 6 months) for
2023 Underlying Profit Before Tax is GBP85m-GBP97.1m with an
average of GBP91.3m
For further information, contact:
Savills 020 7409 8934
Mark Ridley, Group Chief Executive Officer
Simon Shaw, Group Chief Financial Officer
Teneo Communications 020 7353 4200
Jo Blackshaw / Elizabeth Snow
Forward looking statements
Certain statements in this announcement are forward-looking
statements relating to the Group's operations, performance and
financial position based on current expectations of, and
assumptions and forecasts made by, management. They are subject to
a number of risks, uncertainties and other factors which could
cause actual results, performance or achievements of the Group to
differ materially from any outcomes or results expressed or implied
by such forward-looking statements. The Group's principal risks are
described in the 2022 Savills plc Annual Report which can be viewed
online at http://www.savills.com . Such forward looking statements
should therefore be construed in light of such risks, uncertainties
and other factors and undue reliance should not be placed on them.
They are made only as of the date of this announcement and no
representation, assurance, guarantee or warranty is given in
relation to them including as to their accuracy, completeness, or
the basis on which they are made. No obligation is accepted to
publicly revise or update these forward-looking statements or
adjust them as a result of new information or for future events or
developments, except to the extent legally required. Nothing in
this Statement should be construed as a profit forecast.
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END
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