Savills cautious on 2010 after loss-making year in Europe

London-based real estate adviser Savills said losses at its Continental European operations widened to £9.6 mln (EUR 10.6 mln) in 2009 from £7.8 mln in 2008 as the European business was hit by the decline in investment transaction advisory work and restructuring measures. The loss came after a 17% decline in revenue to £28.3 mln from £34.2 mln in 2008. In constant currency, the underlying decline was 26.5%, reflecting the continued weakness in European markets.

After a difficult first half, Savills said there was some improvement in market sentiment during the second half with more transactions completing as investor appetite focused on prime assets in key locations. In addition, prime yield compression in the UK turned investor attention to similar value propositions in the major Continental European cities. Savills has a presence in nine Continental European countries.

Significant restructuring measures implemented over the course of 2009 resulted in gross annualised savings of £13.7m, approximately 20% of the annual cost base, at a cost of approximately £2 mln.

Commenting on the preliminary results, CEO Jeremy Helsby said Savills was maintaining its 'cautious stance'. He predicted that the company's overall performance in 2010 would be similar to that of 2009, although the contributions of individual businesses may vary. 'We remain, however, well positioned with a strong balance sheet to continue our strategy of building the business and pursuing selected investment opportunities should they arise.'

Overall, Savills posted a 24% drop in underlying pretax profit to £25.2 mln over 2009 on revenues down 1.4% at £560.7 mln compared with 2008.

See the March edition of PropertyEU Magazine for an interview with Savills CEO Jeremy Helsby