**UPDATE: Countrywide Earnings Up But Cautious On 2015 Unknowns**
LONDON (Alliance News) – Shares in Countrywide PLC were up on Thursday after the group said its earnings and revenue both increased in the third quarter, though it warned it was seeing an impact from the slowdown in the London market and sounded a note of caution on the possible challenges it may face.
Shares in the estate agency were up 1.5% to 457.40 pence on Thursday and were some of the best performers in the FTSE 250 throughout the morning session.
Countrywide said revenue in the third quarter to the end of September was GBP188.4 million, up 22% year-on-year, with earnings before income, taxation, depreciation and amortisation at GBP40.2 million, up 38%.
Revenue for the nine months to the end of September was GBP522.9 million, a 26% rise, while EBITDA was GBP85.2 million, up 54%.
The group said it was boosted by its lettings business in the quarter, with EBITDA rising 47% for the division. Countrywide said it plans to focus on growing this business further in the future.
It said its London & Premier arm recorded revenue and EBITDA in the third quarter broadly in line with the year before on the back of a strong lettings performance which offset the slowdown in the market. Countrywide said there is evidence of a rebalancing of buyer and seller expectations in the capital which, though likely to have a negative impact in the short term, is a positive for the long-term outlook in the market.
The Lambert Smith Hampton property consultancy business performed ahead of expectations in the quarter, Countrywide said, with a strong performance in its core business boosted by the recent acquisition of Northern Ireland property consultant BTW Shiells.
The group said it had expected a slowdown in market volumes in the third quarter, in part due to the UK’s Mortgage Market Review and also due to tough comparables. It said this has been in evidence in recent months, particularly in London, but said it maintains its view for market volumes to be up 10-15% for the full year against 2013.
Owing to it maintaining its volumes forecast, Countrywide said it is on track to meet market expectations for the year in terms of profit and operating margins.
The group did sound a note of caution on 2015, however, citing the UK General Election in May, the potential for an interest rate hike, and the appetite amongst lenders to increase mortgage volumes as possible challenges it may face.
“The group is in line to deliver a record set of financial results for 2014 notwithstanding the reduced level of recent market growth,” said Alison Platt, chief executive of Countrywide.
“This again, underlines the scale and balance of our broad based business, with improvements in our operating margins, strong growth in lettings, the success of Lambert Smith Hampton and the launch of the residential property investment fund,” Platt added.
“2015 will bring further challenges, but I am confident in our opportunity to continue to deliver significant growth across our business as well as investing in value creating acquisitions whilst, at the same time, delivering increasing returns to our shareholders.”
Jefferies said the update from Countrywide was “solid”, adding it expects its EBITDA to be 44% ahead year-on-year.
The broker said that while Countrywide is joining its peers in suffering from the slowdown in London, it is “not a London pure play”. Jefferies estimates the company generates around 80% of EBITDA from outside the capital.
But it too sounded a note of caution on 2015, saying the fortunes of the company are “inextricably linked to the performance of the underlying UK housing market”. Therefore its estimates will be impacted by the trajectory of mortgage approvals, house prices and activity in the residential rental market. At present, Jefferies said, visibility into 2015 is low.
By Sam Unsted; [email protected]; @SamUAtAlliance
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