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Savills sees Asia Pacific Slowdown

Savills said it expects to see a strengthening in its commercial property business, but a slowdown in the growth of its UK and Asia Pacific businesses in 2010.

Morningstar 18 March, 2010 | 9:39AM

Property consultancy Savills says 2010 revenues are likely to be flat on 2009, with activity in the UK property market dampened by the election.

The group saw revenues for the year to 31 December dip 1% on a constant currency basis to £560.7m. The group’s reported pre-tax profits moved to £13.5m from a loss of £7.7m last year. It will pay a final dividend of 6p per share, bringing the total for the year to 9p. It also saw an improved cash position, with net cash of £66.3m at the year end, compared to £45.7m in 2008.  

The group, which announced in December that full-year profits would be ahead of expectations, said that improved revenues had been driven by the return of an active London residential market in the second half of the year. The Asia Pacific business was also strong and now makes up almost 40% of revenues.

The commercial property side of the business was weak until the fourth quarter when it saw a pick-up in activity. Savills is expecting this area to be strong in 2010. It said that the start of the year has been stronger across all areas. However, it is cautious about about the second half of the year for UK residential and Asia Pacific markets, believing the UK General Election will bring inertia and that China may not grow at the same pace. It expects a better performance in its fund management division and reduced losses in Continental Europe.

The group is still positioning itself for tough markets and has taken steps to cut costs. £62m has been saved during the year and it has closed its UK defined benefit pension scheme to future service-based accrual.

The shares dropped in early trading as markets were disappointed at the outlook, falling 3.26% to 356p. The shares have been hit hard by the economic weakness, but have been stable since July 08 and reached 363p in August. They are still trading at around half their price in early 2007.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Savills PLC909.00 GBX1.45

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