LONDON (ShareCast) - (Sharecast News) - Foxtons said on Thursday that last year was one of its toughest years in terms of sales markets, with earnings expected to drop significantly and 2019 likely to remain challenging.
In an update for the year to 31 December 2018, the estate agent said group revenue fell 5.9% from the previous year to £111m, with revenue for the quarter slipping to £23m from £24m.

The company said adjusted earnings before interest, taxes, depreciation and amortisation are expected to drop to around £3m from £15m in 2017, mostly due to a decline in sales volumes and planned increases in operating expenses as it invested its people, technology and brand.

Foxtons' lettings business remained resilient, with total revenue up a touch at £67m from £66m and a good second half performance. Revenue in the final quarter of the year was up 4% from 2017 to around £12m.

However, it was a very different picture in the sales segment, where revenue declined 16% to £36m with revenue for the quarter down to £9m from £10m. Foxtons said this was "a solid performance amidst ongoing reduced transaction levels".

In the Alexander Hall mortgage broking business, revenue for the year nudged down to around £8m from £9m.

Still, cash flow during the year was good, with year-end cash of £17m versus £19m the year before.

Chief executive officer Nic Budden said: "2018 was one of the toughest sales markets we have ever had in London with transactions falling from last year's historically low levels. Considering this, we have delivered a solid performance and taken steps to ensure the business is best prepared for these conditions through prudent actions on cost and enhancements to our proposition. We are confident in our model which provides high levels of service to achieve the best results for our customers.

"Looking ahead, we expect trading conditions in the sales market to remain challenging throughout 2019. We have become accustomed to operating in these conditions and are well placed to withstand them given our leaner cost base and continued strong balance sheet with no debt."

Numis said that while Foxtons is clearly still suffering under the historically low level of London transactions and the costs of previous branch expansion, its balance sheet remains strong and it has retained its platform to benefit when London market activity finally improves.

"Whilst there is little sign of any improvement happening, market conditions appear to have remained stable through Q2-Q4 of 2018, following a consistent decline for several years," it said.

The broker, which rates the stock at 'buy', cut its 2019 EBITDA forecast from £4m to £3m, reflecting its assumption of a flat market and to deduct £3m of revenue/EBITDA relating to the tenant fee ban.

At 1315 GMT, the shares were down 0.8% to 53.10p.

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