LONDON (Alliance News) - Shares in estate agency and property services group Countrywide PLC fell on Thursday after the company said its pretax profit fell heavily in the first half of 2015 thanks to a fall in transaction volumes in the first half due to a slowdown in the UK housing market in the run-up to the UK General Election.
Countrywide shares were down 5.9% to 520.50 pence on Thursday afternoon, the second worst performer in the FTSE 250. The hit a low of 501.00p earlier.
Countrywide's group revenue in the first half was up to GBP338.6 million from GBP334.5 million in the first half a year earlier, but a 12% decline in transaction volumes in the half meant that its pretax profit fell to GBP28.9 million from GBP37.1 million, a fall of 22%.
The company said it would pay a flat interim dividend of 5 pence per share, but said it expects an improvement in market conditions in the second half amid indications of a recovery in volumes emerging towards the end of the first half.
"As anticipated, the first half of the year saw depressed activity in the UK residential sales market as UK consumers held back from making decisions pending the outcome of the most uncertain General Election in a generation. However, the benefits of our strategy to diversify the group's revenue streams were underlined by Countrywide's ability to ride those challenges with 50% of our profits derived from sources independent of the UK housing transaction market," said Chief Executive Alison Platt.
Countrywide said that, in line with the wider market, its estate agency business struggled against challenging market conditions in the first half, with fewer properties offered for sale and instruction levels falling, both before and after the UK General Election. Similar tough conditions were seen in its London & Premier central London business, where residential transaction volumes fell 8% and the time period from agreed sale to exchange lengthened.
The company also saw tough trading conditions for its conveyancing division, where revenue fell 7% as it entered the year with a weaker pipeline and was then hit by lower activity in the housing market.
The group said its lettings division performed well in the half, with revenue up by 7% as the number of properties under its management increased by 8%. Countrywide also expanded its lettings division in the first half, making 12 small acquisitions for a total of GBP7.4 million, and said it intends to make more as the year goes on.
Countrywide said its financial services division saw a 4% rise in revenue in the half and said it won market share, despite subdued conditions in the mortgage market. The value of Countrywide's mortgage applications rose by 15% year-on-year in the half. Surveying services also performed well, with revenue rising 13% as the number of survey completed by its in-house team rose 9%.
Revenue for Lambert Smith Hampton, its property consultancy arm, increased by 32%, however, on the back of a robust pipeline coming into the year and an increased value of transactions on which the team advised.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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