TIDMSVS
RNS Number : 6286Z
Savills PLC
17 May 2023
17 May 2023
SAVILLS PLC
("Savills" or "the Company")
Trading update
Ahead of its Annual General Meeting (AGM) to be held at 12 noon
today at Savills, 33 Margaret Street, London W1G 0JD, Savills plc,
the international real estate advisor issues the following trading
update:
-- As capital values progressively adjust to higher interest
rates global capital transaction volumes for the year to date are
at the lowest levels seen for a decade; this has clearly impacted
the Group's Commercial transaction business in the early part of
the year.
-- Leasing markets have remained more resilient across most
sectors, although office take up is heavily skewed to prime stock
with strong sustainability credentials.
-- Although volumes are lower than last year, as expected, prime
residential markets have performed well with a particular emphasis
on the London market.
-- Sentiment in China has improved significantly since the end
of COVID restrictions, albeit this has yet to show materially in
the Group's revenue line.
-- Savills less transactional businesses have performed in line with expectations.
-- H1 2023 will be materially impacted by the ongoing
recalibration of global investment markets; and whilst the range of
potential outcomes for the year as a whole has widened since
year-end, we continue to expect progressive improvement in the
second half of the year as markets start to recover.
Mark Ridley, Group Chief Executive, commented:
"During this period of adjustment, I am delighted with the
response of our people both in helping clients facing challenging
circumstances and in seeking longer term business development
initiatives, which our strong balance sheet enables us to pursue at
this opportune time. The strength of our less transactional
businesses has helped underpin the Group's performance overall. The
anticipated market corrections in 2023 are happening largely as
anticipated. As greater certainty over the future pattern of global
interest rates is emerging, we expect progressive recovery through
the third and fourth quarters of the year and into 2024."
Trading Update
In the Asia Pacific region, Japan and Korea have traded well and
sentiment in mainland China has significantly improved since the
New Year. Elsewhere, markets are correcting to the prevailing level
of interest rates. Our substantial Property and Facilities
Management business in the region continues to perform well.
In the UK, our performance has been largely in line with
expectations, driven primarily by the good levels of activity in
the prime residential markets and some recovery in retail. Other
commercial capital markets have been severely impacted as pricing
adjusts, however we have enjoyed an unusually high market share in
prime transactional markets, which has partially mitigated the
significant decline in volumes. Partly because post-Brexit, UK
yields did not compress as far as other international markets, we
believe that prime real estate valuations have largely corrected
and we await improving sentiment into which to launch a very
attractive pipeline. Our less transactional service lines have
performed in line with our expectations to date.
In Continental Europe and the Middle East, where Savills is
highly dependent upon transactional activity, volumes, particularly
in the major markets of Germany and France, have been severely
reduced during the period. Leasing momentum remains subdued and
across capital markets, yields have moved out considerably, and the
correction, although not yet complete, is well underway. This has
had a significant impact on our business in the year to date.
In North America, where the Group is substantially dependent
upon leasing activity by corporate occupiers, our business
performance has been in line with our expectations, albeit
individual transaction sizes are currently much reduced.
Savills Investment Management has traded in line with our
expectations. In an environment which remains challenging for the
deployment of equity capital and valuations adjust to prevailing
debt costs, our business has experienced the expected impact on
both base management and performance fees during the period.
Summary and Outlook
In the year to date, global commercial investment volumes have
either reached or approached their lowest levels in many years. As
a result, at this early stage, the range of outcomes for the year
as a whole has widened, however our prime commercial leasing,
residential, consultancy and property management businesses all
continue to trade in line with expectations.
Although it is impossible accurately to predict the timing of
individual market recoveries, we remain optimistic that markets
will start to improve in the second half and we are seeing early
signs of this in some areas. Confidence in the ongoing recovery and
level of transactional velocity through the latter part of the year
will be key to supporting our view that 2024 will show transaction
volume growth in most markets. In the meantime, we continue to
pursue opportunities to develop our business both through targeted
recruitment and selective acquisition.
We anticipate announcing the Group's Half Year Results for the
six months to 30 June on 10 August 2023.
For further information, contact:
Savills 020 7409 8934
Mark Ridley, Group Chief Executive Officer
Simon Shaw, Group Chief Financial Officer
Teneo 020 7353 4200
Mark Burgess
Will Palfreyman
Jo Blackshaw
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END
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