TIDMFOXT
RNS Number : 3213R
Foxtons Group PLC
26 October 2023
Foxtons Group plc
Q3 2023 Trading update
Third consecutive quarter of market outperformance as
operational upgrades take effect
26 October 2023 - Foxtons Group plc (LSE:FOXT), London's leading
estate agency, has continued to deliver against its operational
turnaround plan and outperform the market(1) . For the nine months
ended 30 September 2023, revenue was up 5% to GBP114.8m (Q3 YTD
2022: GBP108.9m) despite sales market volumes being down 23%(2) .
For the three months ended 30 September 2023, revenue was broadly
flat at GBP43.9m against a robust prior year comparative (Q3 2022:
GBP43.8m).
Commenting on Q3, Guy Gittins, Chief Executive Officer,
said:
"We have delivered a third consecutive quarter of market
outperformance as operational upgrades take effect. Our investment
in fee earners, training, data and brand is yielding results sooner
than I expected, and is now delivering material benefits to our
competitiveness and market positioning.
"Market share gains across Lettings, Sales and Financial
Services have enabled us to grow revenue year-to-date despite
reduced sales market transaction volumes, a result of the higher
interest rate environment. Earlier this month we launched our new
"Foxtons - London's No. 1" marketing campaign, having regained the
title as London's largest estate agency brand off the back of
significant market share gains in the first half of the year.
"The operational progress made to date, and our continued focus
on growing non-cyclical and recurring revenues to decouple earnings
from sales market volatility, gives me confidence that we will
continue to deliver against our strategic priorities and
medium-term profit ambitions."
Group revenue: 30 September (Q3 and 9 months YTD)
3 months Q3 2023 Q3 2022 GBPm change % change
------------------------- ---------- ---------- ------------- ---------
Lettings GBP31.6m GBP29.2m GBP2.4m 8%
Sales GBP9.9m GBP11.9m (GBP2.0m) (17%)
Financial Services GBP2.4m GBP2.8m (GBP0.4m) (13%)
--------------------- ------------- ----------- ------------- ---------
Total GBP43.9m GBP43.8m GBP0.1m -
--------------------- ------------- ----------- ------------- ---------
9 months Q3 2023 Q3 2022 GBPm change % change
YTD YTD
-------------------------- ---------- ----------- ------------- ---------
Lettings GBP81.3m GBP68.6m GBP12.7m 18%
Sales GBP26.9m GBP32.7m (GBP5.9m) (18%)
Financial Services GBP6.6m GBP7.6m (GBP0.9m) (12%)
--------------------- -------------- ------------ ------------- ---------
Total GBP114.8m GBP108.9m GBP5.9m 5%
--------------------- -------------- ------------ ------------- ---------
Lettings
Q3 Lettings revenue was up 8% to GBP31.6m (Q3 2022: GBP29.2m)
and up 18% on a year-to-date basis to GBP81.3m (Q3 2022 YTD:
GBP68.6m). Q3 revenue growth of GBP2.4m, included GBP0.5m (+2%) of
organic growth, GBP0.6m of incremental revenue from the March 2023
acquisition and GBP1.3m growth in interest on rental deposits. As
guided in the interim results, the rate of rental price growth
moderated compared to the previous two quarters, reflecting more
normalised supply and demand dynamics.
Sales
Sales volumes have continued to outperform the market with
significant market share gains(3) delivered in the quarter. Q3
Sales revenue was down 17% to GBP9.9m (Q3 2022: GBP11.9m), compared
to a 23% reduction in market exchange volumes(4) . On a
year-to-date basis, Sales revenue was down 18% to GBP26.9m (Q3 2022
YTD: GBP32.7m).
Market share gains and other operational improvements enabled a
6% increase in Q3 viewings, compared to the prior year, and drove
good Q3 under offer rates, which were only 4% lower than the prior
year against a significantly weaker market backdrop. Furthermore,
despite a 5% decline in property values across the market(5) , the
Foxtons average exchange price remains flat as a result of gaining
market share in higher value properties.
Financial Services
Financial Services revenue was down 13% in Q3 to GBP2.4m (Q3
2022: GBP2.8m) and down 12% to GBP6.6m (Q3 2022 YTD: GBP7.6m) on a
year-to-date basis. This reflected lower new purchase mortgage
volumes, in line with the sales market, and an increased proportion
of lower value product transfer mortgages in the refinance
portfolio. Despite these headwinds, Financial Services has
outperformed the wider market in the year, as the investment in
additional fee earner capacity has supported growth in the market
share of mortgage underwriting(6) .
FY23 full year outlook
In Lettings, Q4 performance is expected to be robust, although
year-on-year rental increases are expected to moderate against the
comparative quarter, during which rental prices were already at
elevated levels. The supply of available rental properties is
expected to continue to improve, providing an additional
opportunity to increase market share.
In Sales, although Q4 2023 revenue is expected to be lower than
the prior year comparative, market share gains mean the adverse
variance versus Q4 2022 should reduce compared to previous
quarters. Furthermore, with mortgage rates beginning to stabilise,
Q4 2023 buyer demand will outpace Q4 2022 levels, which was heavily
impacted by the September 2022 mini-budget. As a result, we expect
the 31 December 2023 under-offer pipeline to be significantly
higher than the prior year, which will drive year-on-year revenue
growth in the first quarter of 2024.
At 31 December 2023 we are forecasting a small net cash position
assuming no further acquisitions ahead of the year end. As noted
within the interim results, the cash position reflects the
acquisition completed in March 2023, dividends paid, share buybacks
and the introduction of shorter billing periods for landlords
opting to agree to longer tenancy terms, in order to drive organic
Lettings revenue growth and portfolio retention.
Overall, full year earnings are expected to be in-line with
consensus(7) . The Group's strategy of acquiring lettings
businesses, coupled with Lettings organic growth, has protected
profitability in a lower volume sales market to a far greater
extent than in previous years.
For further information, please contact:
Foxtons Group plc investor@foxtonsgroup.co.uk
Chris Hough, Chief Financial
Officer
Muhammad Patel, Investor Relations +44 20 7893 6261
TB Cardew Foxtons@tbcardew.com
Will Baldwin-Charles/ Olivia +44 7834 524833 / +44 7552
Rosser 864 250
(1) Outperformance on a market share basis. Calculated as
Foxtons share of Lettings instruction volumes, Sales exchange
volumes and Financial Services mortgage underwriting volumes.
(2) Exchange volumes in Foxtons core addressable markets for the
9 months ended September 2022 and 2023. Source: TwentyCi.
(3) Share of exchange volumes in Foxtons core addressable
markets. Source: TwentyCi.
(4) Exchange volumes in Foxtons core addressable markets for the
3 months ended September 2022 and 2023. Source: TwentyCi.
(5) Source: Halifax House Price Index.
(6) Share of UK mortgage underwriting volumes. Source: UK
Finance.
(7) Consensus expectations for Foxtons Group plc, being the
average of forecasts for the year ending 31 December 2023 provided
by analysts covering the Group, is revenue of GBP141.5m and
adjusted operating profit of GBP11.8m (adjusted operating profit
includes the amortisation of acquired intangibles).
About
Founded in 1981, Foxtons is London's leading estate agency and
largest lettings agent, with a portfolio of over 27,000 tenancies.
The Group operates from a network of over 60 interconnected
branches, offering a range of residential property services across
three business segments: Lettings, Sales and Financial
Services.
The Group's strategy to accelerate growth is focused on
non-cyclical and recurring revenues from Lettings and Financial
Services refinance activities, supplemented by market share growth
in Sales. In order to drive organic growth, the Group is rebuilding
its competitive advantages, with a strong focus on leveraging data
and technology; investing in people and culture; and reinvigorating
the Foxtons brand.
By rebuilding Foxtons' estate agency DNA and returning the
business to its position as London's go-to estate agent, the Group
aims deliver significant profit growth and deliver value for
shareholders.
-- Lettings organic growth : Focus on winning new property
instructions, speed to market and high quality landlord service to
drive revenue growth.
-- Lettings acquisitive growth : Acquire, integrate and service
high quality lettings portfolios.
-- Sales market share growth: Reinvigorating the Foxtons brand
and increasing sales headcount to grow addressable market
share.
-- Financial Services revenue growth : Increasing adviser
headcount, improving productivity and cross sell to drive revenue
growth.
To find out more, please visit www.foxtonsgroup.co.uk
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END
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