Savills to be profitable in 2020 despite Covid-19 impact

Savills said it expected to be profitable in 2020 despite the impact of Covid-19 on global property markets and that its debt had fallen.

The FTSE 250 property agent said the coronavirus crisis had a significant impact on real estate deals in the six months to the end of June as property markets closed down to stem the spread of the disease. But Savills said less transactional businesses such as management and consultancy had increased revenue and profit and that it was profitable in the first half.

Results for the year depend greatly on how quickly property markets recover in the second half and the outlook is not clear enough to provide guidance, Savills said. With interest rates low the conditions for real estate investment look positive, it added.

Savills said the cash impact of trading performance and mitigating actions meant half-year net debt would be "substantially reduced" from £139m at the end of the first half in 2019. It did not give a figure.

After lockdowns in markets such as China, Japan and Australia hit trading in Asia during the first quarter business started to recover from a low base in the second quarter, Savills said. In the UK business was "very resilient" because of demand for services and deals left over from before the crisis.

A strong pipeline of sales also helped support trading in Europe and the Middle East. In North America the group's dependency on leasing by corporate tenants meant it was "significantly affected" by lockdowns in big cities such as New York, Chicago and San Francisco.

"Whilst our less transactional businesses have provided a solid platform for the group during the pandemic, our overall performance for the year will be highly dependent upon the extent to which regional transactional markets recover in the second half," Savills said.

"We are confident in the group's capability to withstand all modelled scenarios for the year and to continue to execute our growth strategies and deliver a profitable performance in 2020. However, given the wide range of potential outcomes at this stage, it is not currently possible to provide meaningful guidance for the year."

Savills shares fell 3.4% to 802.50p at 08:53 BST.