Flurry of end of year deals sees Savills upgrade results expectations
Savills said it had had a strong finish to the year following the completion of a flurry of deals which means its underlying results will be "meaningfully" ahead of previous expectations as it provided a pre-close trading update for the year to 31 December 2016.
The group said it had "experienced a strong finish to the year with the completion of significant volumes of commercial and residential transactions in a number of our businesses around the world and benefited from further sterling devaluation".
Accordingly, the Group now anticipates that underlying results for the year to 31 December 2016 will be meaningfully ahead of our previous expectations.
Savills Investment Management completed a number of significant disposal transactions earlier than anticipated, as part of the wind down of the German mutual funds managed by the former SEB Investment Management business (acquired in September 2015). As this benefited Savills in 2016, it moderates its expectations for the transactional element of the Investment Management business in 2017.
In the UK, it saw increased market share in commercial investment transactions, primarily as a result of the post-referendum interest emanating from overseas. In addition, notwithstanding a slower December, its UK residential business performed "rather better than anticipated", with the top end of the market showing similar currency-related drivers of investment activity from international buyers. These factors largely mitigated the anticipated reduction in transactional activity during the year.
Its Asia Pacific and Continental European transactional businesses have performed ahead of expectations, offsetting a flat performance from the US business where, particularly in respect of major or complex occupier transactions, corporations have tended to defer significant decision making in advance of the change of US Administration.
Across the Group its less transactional businesses performed in line with our expectations and the devaluation of sterling against major currencies, which became increasingly beneficial in the final quarter, further boosted the group’s reported profits.
In the current year, against the backdrop of heightened uncertainty over global economic prospects, geopolitical risks and rising bond yields, it expects a tempering of the strong transaction volumes of recent times in many markets. Accordingly it retains original expectations for 2017.
Savills will report 2016 full year results on 22nd March 2017.