Savills sees FY 'meaningfully ahead' of previous expectations

(ShareCast News) - FTSE 250 estate agent Savills said on Thursday that results for the year to the end of December are likely to be "meaningfully ahead" of its previous expectations following a strong finish to the year.The group saw the completion of significant volumes of commercial and residential transactions in a number of its businesses around the world and benefited from further sterling devaluation.In the UK, Savills saw increased market share in commercial investment transactions, mostly as a result of the post-referendum interest from overseas. In addition, notwithstanding a slower December, its UK residential business performed "rather better than anticipated", with the top end of the market showing similar currency-related drivers of investment activity from international buyers.These factors largely mitigated the anticipated reduction in transactional activity during the year.Savills Investment Management completed a number of significant disposal transactions earlier than anticipated, as part of the wind-down of the German mutual funds managed by the former SEB Investment Management business, which benefited the group in 2016. As a result, the company has now moderated its expectations for the transactional element of the business in 2017.The company's Asia Pacific and Continental European transactional businesses performed ahead of its expectations, offsetting a flat performance from the US business where corporations deferred decision-making ahead of the change of US Administration.Savills' less transactional businesses performed in line with its expectations and the devaluation of the pound versus major currencies further boosted reported profits."In the current year, against the backdrop of heightened uncertainty over global economic prospects, geopolitical risks and rising bond yields, we expect a tempering of the strong transaction volumes of recent times in many markets. Accordingly we retain our original expectations for 2017."Numis reacted by upping its 2016 pre-tax profit forecast to £135m from £120m and its 2017 estimate to £130m from £124m. In addition, the brokerage introduced a 2018 pre-tax profit estimate of £140m."We retain a cautious view for 2017 given global economic/political uncertainty although would note that Savills has a consistent track record of outperforming estimates. We think Savills diverse model is not reflected in its sub 10x PE rating and we reiterate our 'buy' rating."At 0955 GMT, the shares were up 7.8% to 744.50p.