Savills to cut staff as first-half profits slump

Property adviser Savills said on Thursday that it will seek to realise cost savings of £20 mln (EUR25 mln) in 2008 as pre-tax profits and revenues for the first six months of the year slid mainly as a result of the market downturn in the UK and Europe.

The company said cost reductions had been targeted in a number of areas including staff, marketing, travel and property costs, 'with a particular focus on our transaction and financial services businesses which have been most affected by the downturn.'

Underlying group profit before tax fell 41% to £19.2 mln from £32.5 mln a year earlier, as revenue dropped 2.1% to £278.1 mln, reflecting weaker market conditions in the UK and Europe. This decline more than offset the growth achieved in Asia, where transactional activity proved more resilient despite the more challenging market conditions. Despite the downturn, Savills said it will pay an unchanged interim dividend of 6.0p.

Looking ahead, the adviser said that prospects for the UK and US commercial capital markets, UK residential and UK mortgage broking businesses 'continue to depend on how quickly confidence returns to financial markets, which currently show no sign of improvement.' As for Europe, conditions 'remain challenging as the impact of the credit squeeze is increasingly felt,' Savills noted.