Foxtons profits slump as weak London sales market weighs

(Sharecast News) - Property platform Foxtons reported a sharp fall in first-half profits on Thursday as weak activity in the London property market and disruption following the Renters' Rights Act offset resilient recurring revenues. Profit before tax dropped 57% year-on-year to £4.4m in the six months ended 30 June, while earnings per share fell 60% to 1.0p from 2.5p.

Adjusted operating profit was down 29% at £8.9m and adjusted EBITDA fell 25% to £10.4m.

Group revenue decreased 3% to £83.7m.

Sales revenue dropped 13% to £23.5m as transaction volumes fell 11%, with Foxtons pointing to weak consumer confidence, political uncertainty and higher-than-expected interest rates. Lettings revenue was broadly flat at £54.7m, after a £3m reversal of previously recognised revenue linked to elevated early tenancy terminations following the introduction of the Renters' Rights Act. Meanwhile, financial services revenue rose 20% to £5.4m, supported by stronger refinancing activity.

Net free cash flow fell 62% to £1.4m, while net debt widened to £28.4m from £18.2m. The interim dividend was held at 0.24p per share.

Chief executive Guy Gittins said: "Against a challenging backdrop of continued sales market weakness and short-term lettings volatility, we continued to execute on our strategy, with our long-term focus on accelerating growth in non-cyclical and recurring Lettings revenues underpinning performance through these headwinds."

Foxtons expects full-year adjusted operating profit of between £17m and £19m, with earnings weighted towards the second half as cost savings take effect and tenant terminations stabilise. However, it warned that London sales conditions remained challenging and that a meaningful near-term improvement was unlikely.

Foxtons shares were up 0.8% at 40p by 1340 BST.

See the latest RNS on Investegate.