Asia Helps Savills Beat Profit Forecasts

Source : The Business Times, March 13, 2008

Profit rises 14% to £85.5m as consultancy division also performs well

(LONDON) British property services firm Savills reported a forecast-beating 14 per cent rise in 2007 profit, as Asia and consultancy businesses shielded it from the global credit crunch, lifting its shares 6.5 per cent.

Savills yesterday said underlying profit before tax rose to ??pounds;85.5 million (S$238.6 million), beating an average forecast of ??pounds;71.3 million, as it had benefited from a broader international presence which followed its acquisition of New York-based brokerage Granite Partners in August.

Savills said its Asia-Pacific business showed strong growth in revenue, spurred by strong residential occupier demand in hotspots such as Hong Kong, China, Australia and Singapore.

'Asia was largely unaffected by the credit squeeze with investor and occupier markets continuing to perform strongly,' it said.

The region's bullish economic growth outlook and consultancy business will continue to drive growth this year, although overall performance will depend on a recovery in the financial market, Savills chief executive designate Jeremy Helsby, who will take over from Aubrey Adams in May, said.

Shares in Savills rose 4.6 per cent to 348 1/4 pence by 0918 GMT, after hitting 354 3/4p.

'Underlying pretax profit was ahead of our forecast of ??pounds;81.1 million,' Arbuthnot analyst Nan Rogers said. 'The consultancy division's contribution was up 42 per cent and the uplift from Asia-Pacific was also ahead by 40 per cent. These are the two areas which seem to be least affected by the credit crunch.'

But Savills cautioned that 2008 will be a challenging year for the property industry worldwide, as the global financial market turmoil persists.

'The outlook for our UK and US Commercial Capital Markets businesses and our UK Residential and Mortgage Broking businesses continues to depend on how quickly confidence returns to financial markets.'

In the UK, commercial investment transactions slowed in the second half while residential markets showed some signs of slowing towards the year-end.

It said office demand in central London will remain subdued until the credit squeeze has eased, although it sees no sharp downturn, given the current low levels of vacancy.

In the UK residential market, Savills expected low turnover and flat house price growth. -- Reuters