LONDON (Alliance News) - Countrywide PLC said Wednesday its income for the quarter ended March 31 was down 10% to GBP145 million from GBP162 million for the same period in 2017 after it issued a profit warning in January.
The housebuilder, however, is encouraged by its Sales & Lettings division. In Sales, it has seen an "improvement" in both the register of properties available for sale and in its market share of listings compared with the fourth quarter of 2017. In lettings, its share of listings is also ahead of the previous quarter.
Shares in Countrywide are up 0.4% Wednesday morning to 102.40 pence each.
In March, company swung to a pretax loss, axed its dividend payout, and warned of further pain in the new year.
In 2017, the estate agent sunk to a pretax loss of GBP212.1 million from a GBP19.5 million profit the year prior. Revenue also fell to GBP661.1 million from GBP724.0 million the year before.
Profit performance was chiefly hurt by GBP237.2 million in exceptional charges in 2017, compared to GBP33.2 million in 2016.
This was mostly made up of a massive GBP216.1 million impairment charge to goodwill, which in turn was primarily made up of a GBP192.3 million impairment of goodwill on Countrywide's UK and London sales and lettings business. It was prompted by declines in income and profit from both units.
Nonetheless, even after excluding exceptionals, pretax profit more than halved to GBP25.2 million from GBP52.7 million the year before.
Countrywide, therefore, axed its dividend payment for 2017. In 2016, it paid 5.0 pence per share dividend.
"The under-performance of our business over the last three years has resulted in us making significant management change in the group," Countrywide Executive Chairman Peter Long said.
In January, the company's former chief executive, Alison Platt, resigned following a profit warning.
"Industry expertise in all areas of our business is key," Long added. "Within Sales and Lettings, the previous strategy resulted in us losing a lot of that expertise. In the group, we are fortunate in that we have an industry veteran, Paul Creffield, who has been promoted to the role of group operations director. His deep understanding of the market and operations means that we have quickly been able to identify what we need to do to begin addressing our under-performance."
"Fundamentally," Long continued, "Countrywide has a unique market position given its breadth within the property services industry. We have established and trusted brands that resonate with customers, together with dedicated and committed colleagues who are the cornerstone of our business."
"The strong areas in the group, Financial Services and B2B, have unfortunately been overshadowed by the poor performance in our core Sales and Lettings business units," Long explained. "We believe these business units are fixable, know what we have to do to restore them and the steps to take that should result in a return to profitable growth. This will take time but ultimately there will be much upside for our group and our shareholders, whose patience has been sorely tested recently."
Countrywide emphasised, however, that 2018's pipeline was "significantly" below 2017 levels. The company therefore expects profit from the first half of 2018 to be lower than in 2017 and does not expect the remainder of the year to make up for this reduction.
The company forecast interim 2018 adjusted earnings before interest, taxation, depreciation and amortisation to fall GBP10 million below the year before. In 2017, interim adjusted Ebitda stood at GBP28.1 million - itself down from GBP37.9 million the year before.
