Countrywide blames housing market slowdown for profits warning as shares plunge
Shares in Britain's biggest lettings and estate agency Countrywide have plunged more than 12 per cent this morning after the company issued a shock profits warning, blaming a slowdown in the housing market.
The company, which owns estate agencies including Hamptons, Blundells and John D Wood, despite generally encouraging economic conditions, the pick-up in residential transactions it had anticipated following the General Election had "failed to materialise in any significant way".
As a result is expects house sales volumes for the year to at least five per cent below 2014 at around 950,000, and group earnings before interest, tax, depreciation and amortisation (EBITDA) to be less than the £121.1m reported in 2014.
Chief executive Alison Platt said a shortage of homes on the market had constrained sales while changes to stamp duty have also hit sales of high-end properties. At the same time Countrywide is investing heavily in its expansion.
"While we are undoubtedly experiencing a period of short-term pressure on market volumes, we continue to invest in our underlying business to ensure we have the foundation for future growth," she said,
EBITDA for the nine months to 30 September was 11 per cent below last year, with total house exchanges down 10 per cent to 48,541 in the period.
Jefferies analyst Anthony Codling has cut his price target from 790p to 630p for the year but kept his "buy" rating.
"We are reducing our estimates today to reflect the dual impact of elections & investment. Without the help of Help to Buy equity loans, the existing homes transaction market has not been as sheltered as the new-build sector from the impact of May's general election. Transaction levels were muted ahead of the election and have not picked up afterwards as we anticipated," he said.