(Reuters) - Countrywide said uncertainty around Britain’s exit from the European Union had hit residential and commercial property markets, prompting the nation’s largest estate agent to warn of a shortfall in its first-half earnings.
Countrywide has been trying to recover from a botched 2015 restructuring that led to four profit warnings and a deeply discounted share issue, but Britain’s cooling real estate market has compounded its problems.
Countrywide said on Tuesday that it now expects first-half adjusted earnings before interest, tax, depreciation, amortisation and exceptional items to be about 5 million pounds lower than 2018.
The company had earlier forecast adjusted core earnings to be about 3 million pounds to 5 million pounds lower.
Countrywide, which was founded in 1986 and runs 60 high street brands including Hamptons International, Bairstow Eves and Bridgfords, said uncertainties surrounding Brexit had weighed heavily on consumer confidence.
“For Countrywide, this (Brexit) uncertainty is affecting the residential and commercial property markets, particularly in London and the South,” the company said in a statement.
The company reported total group income of 140.3 million pounds for the first quarter ended March 31, down from 144.6 million pounds a year earlier.
“While Countrywide’s EBITDA in 2019 is supported by its Financial Services and B2B operations, we see the currently loss-making estate agency business as the fulcrum for share price performance,” Jefferies analysts said.
“Until investors gain confidence in an improvement in the housing market, the increasing leverage on the balance sheet may restrain share price momentum,” the analysts added.
The company’s shares were 3.8 percent lower at 6.77 pence at 0745 GMT, giving it a valuation of only 115 million pounds ($149 million).
Countrywide, however, said measures to control costs would help in the second half of the year, adding it expects annual adjusted core earnings to be broadly in line with its expectations. In 2018, adjusted earnings had halved to 32.7 million pounds.
Peel Hunt analysts lowered their annual core earnings estimates by about 16 percent, citing challenging trading conditions and the downbeat first half guidance.
Countrywide in March forecast flat earnings in 2019, citing uncertainty in the housing market due to Brexit, adding that people were reluctant to put their houses on the market and homes were taking longer to sell.
Last year, Countrywide launched a three-year plan to rebuild expertise and staffing levels in its sales and lettings and financial services businesses after its 2015 restructuring led to the loss of experienced staff.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty/Keith Weir