More on Countrywide
Countrywide: H1 Results
Countrywide, the UK’s largest estate agency chain, reported an operating profit £2m for the half year to June 2005, down significantly from the £41.5m reported a year ago. Profit before tax slipped to £3.5m from £30.7m a year ago.
The company blames the weaker market for the poor performance. The land registry indicates that transactions are down 33% from the same period last year. On a per-office basis, Countrywide has seen new sales arranged plunge 23.7% from last year, whilst exchanges were 29.1% lower. Countrywide acquired a chain of Bradford & Bingley estate agency offices last year making absolute comparisons difficult, hence the per-office comparisons.
Countrywide acquired a chain of 307 estate agency offices from Bradford & Bingley at a cost of £44.4m in October 2004. The company says it estimates that the acquired businesses made a negative contribution of £2.7m (they were estimated to have lost £2.3m in the year to December 2003). Countrywide has closed 33 branches and cut staff by 9% so far this year to try to keep costs under control.
The only positive news in the announcement was that the number of house sales in the pipeline is nearly 7,500 higher than at the start of the year. Countrywide says it can remain profitable if the housing market stabilises at this level but warns that public confidence “could easily be knocked off course by external events”. Our own outlook on the housing market is negative and Countrywide has been harder hit than others in the sector.
Given that growth prospects look bleak the main reason to acquire the share would be dividend yield but poor cashflows (as well as the low level of earnings in absolute terms) will limit payout. The current yield is 0.5%.
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