Savills reports significant profit growth but shares decline amid investment management struggles

Savills has reported a significant increase in profits, despite its investment management arm experiencing a decline due to high interest rates.

In its latest financial results, the FTSE 250-listed company announced a 7% rise in revenue to £2.4bn for the year ended December 31, up from £2.24bn in 2023, as reported by City AM.

Underlying profit before tax surged by 38% to £130.4m, while reported profit before tax jumped 59% to £88.3m.

Underlying basic earnings per share also saw a 31% increase to 66.2p.

However, Savills' investment management arm saw an 11% drop in revenue, which the company attributed to valuation adjustments during the year, stating that "the raising and deployment of capital inevitably more challenging during a period of interest rate and price volatility."

Despite the positive financial results, Savills' share price plummeted by over 5% this morning, continuing a month-long decline. The share price has fallen by more than 15% since mid-February.

Analysts at Peel Hunt remain optimistic about Savills' prospects, stating that the company "remains a quality business" and is "poised for a healthy recovery as commercial transition activity returns to normal."

They maintained their target price of 1,100p and 'Add' rating, saying "We continue to like the business model and believe it remains an attractive investment," Mark Ridley, Chief Executive of Savills, commented: "Savills improved performance in 2024 reflects the robust earnings provided by our less transactional businesses together with the effect of our inherent operating leverage in the early recovery of transactional markets."

"Most markets were in recovery as we entered 2025 and, whilst uncertainty continues, there remains the expectation of reductions in the cost of capital during the year."