In a trading update this morning, Foxtons said that it expects this year to be challenging following a fall in profits and revenue during 2016.
The company said that total group revenue for the year was circa £133m (2015: £150m), with revenue for the quarter ended December 31, 2016 totalling circa £26m (2015: £35m).
Adjusted EBITDA (profits after costs) for the full year is expected to be approximately £25m (2015: £46m).
The reduction in group revenue for the year reflects the “significant fall in sales volumes immediately following the first quarter of 2016′, the company said.
In the final quarter of 2016, sales revenues were circa £12m (2015: £20m) as volumes remained subdued. Lettings revenues in Q4 were circa £13m (2015: £13m) and have remained more resilient, “benefitting from our high levels of renewals despite lower levels of new tenant activity and some downward pressure on rents arising from increased stock availability”.
In its statement this morning, Foxtons said: “Our lettings business remains a consistent and recurring revenue stream which comprises over half of group revenues. We have continued to focus on maintaining tight cost control while market conditions remain challenging, which provided protection to our EBITDA margin during the second half of the year.”
Nic Budden, CEO, said: “Despite a challenging year across the residential property markets, we have continued to make good progress in respect of our strategic initiatives, including building our presence in PRS and new homes, and leveraging our technology using data analytics and digital marketing to enhance our customer proposition.
“We also opened seven new branches in 2016 and a further two branches in outer London are due to open in Q1 2017. Looking ahead, we expect trading conditions to remain challenging in 2017.
“Should current levels of sales activity continue in the short term, it is likely that 2017 volumes will be below those in 2016. Our balanced business model provides resilience against sales market cycles and we have a strong balance sheet with no debt. Our high-touch approach to customer service continues to be a key differentiator and as the most recognised residential brand in London, we are uniquely positioned to manage through the market uncertainties and take advantage of any change in conditions.”