Countrywide and Connells hungry to buy up agency businesses

The rising fortunes of the housing industry have been revealed in results by two of the UK’s large corporate agents.

Both Countrywide and Connells have reported large rises in profits for the first half of this year. Both also express optimism about their current pipeline business, up from this time a year ago – in Countrywide’s case up 8%, and in Connells’ case up 25%.

Both businesses also made it clear that they are in the market for acquisitions –Countrywide is hungry for more lettings businesses, while Connells will look at both sales and lettings agency deals.

Countrywide reported a 4% rise in income and a 35% increase in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of £26.4m. Operating profits rose by 47% to £22m.

Connells reported pre-tax profits of £23m, compared with £18.5m for the same period last year. The results equate to a 24% increase in profits over the first half of last year, and a 53% rise when compared to the first half of 2011.

Countrywide – the biggest UK chain – reported a 2% rise in house sales to just under 29,000 in the first half of this year. Connells reported house sales up by 16.7%, rising to a 28% year-on-year growth in June.

However, income in the estate agency division at Countrywide was slightly down, standing at £101.8m – down from £103.5m for the same period a year ago. Income, which is stated separately in the Countrywide accounts, showed that Hamptons’ turnover rose from £32.9m to £34.8m.

Countrywide’s overall performance was boosted by a rise in its lettings division business, to achieve the highest turnover and profits in the group’s history. It had 24% more properties under management, with the division having increased EBITDA by 28%. Total income from lettings was £53.4m, up from £45.3m.

Countrywide has grown its lettings business with nine acquisitions in the first half of this year, and says more purchases are planned.

Despite the small fall in revenue from house sales, Countrywide’s profits in the estate agency division rose following consolidation of 22 regional administration centres to a single national office.

Connells said Funding for Lending and Help to Buy have enabled increasing numbers of buyers to purchase a property in the first half of 2013. It reported increases in buyer registrations (up 14.2%) and property instructions (up 8.8% for secondhand and 7.3% for new-build) in the first six months of this year.
 
David Livesey, chief executive, said: “Connells Group has continued to invest across the business over recent years and this is now bearing fruit, as shown by these fantastic results for the first half of the year.

“Our sales pipeline is up over 25% compared to this time in 2012 so we are expecting even better results in the second half of the year.”
 
He said that going forward, the Connells Group has ambitions for further expansion which will be a mixture of organic growth and acquisitions. He said he is open to new opportunities to acquire both sales and lettings businesses.