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LONDON (Alliance News) - FTSE 250-listed estate agent Savills PLC hiked its interim dividend Thursday despite profit dropping on rising costs and tough conditions for its largest business unit.
For the six months ended June, pretax profit declined 18% to GBP26.7 million from GBP32.4 million the year prior. This was despite revenue rising 1.9% to GBP727.8 million from GBP714.4 million the year before.
Profit performance was hurt by a rise in operating expenses to GBP216.2 million from GBP205.9 million the year prior. It also was held back by a steep fall in profit from its transaction advisory business unit, which is its largest. Underlying profit in the unit dropped 20% on the year prior, despite flat revenue.
Savills proposed a 4.8 pence per share interim dividend, up 3.2% from 4.65p the year prior.
"In the face of some challenging market conditions, Savills has delivered a resilient first half performance reflecting our geographic diversity, breadth of operations, recent business investment activity and the strength of our UK residential business," Savills Chief Executive Officer Jeremy Helsby said.
"In line with our overall growth strategy, we have continued to invest across the business, which has affected profits in the short term," Helsby added. "During the period we completed the acquisition of Cluttons Middle East, providing Savills a strategic platform for growth in this region. In addition, in the UK we further enhanced our leading property management platform announcing the acquisition of the third party property management portfolio of Broadgate Estates from British Land. "
In May, Savills acquired Cluttons International Holdings Ltd and Cluttons Management Ltd for GBP21.1 million.
"Continued growth in our less transactional businesses, significant overseas earnings and strong shares in many of our most important transactional markets position Savills well to weather fluctuations in markets and to capitalise on the opportunities which we expect to emerge over time," Helsby continued.
"We have a robust pipeline of activity for the second half," Helsby said, "despite an environment of escalating political and economic uncertainty, and we continue to anticipate that our performance for the full year will be in line with the board's expectations."
Shares in Savills were 1.7% lower at 849.00 pence in early trading on Thursday.
