One of the industry’s leading analysts says Countrywide’s figures for the first half of 2017 are likely to be tough - but he forecasts the group’s performance is likely to improve significantly in the final six months of the year.
Countrywide’s long-term share price fall has been well documented; it is now languishing around 165.0, up from its lowest early this year but a far fry from three years ago when it hit 686.5. Its high volume of senior staffing changes - some walk-outs, some redundancies, some orderly departures - have also been heavily publicised. Its latest senior management reshuffle, reported here last month, took effect earlier this week.
But now Anthony Codling, a leading analyst at Jefferies, has told investors in a guidance note that ‘headwinds turn into tailwinds’ for Countrywide as the year goes on.
He says the group’s trading report on the first half of 2017, released in three weeks’ time, may prove discouraging. Countrywide’s EBITDA - City jargon for its earnings, a crucial measure of corporate performance - will be around £25m to £30m, he predicts, thanks to the General Election hiatus, reduced buy to let purchasing, and the London market’s continuing problems triggered by high stamp duty on many more expensive properties.
However he says the next six months should be far better.
To meet Codling’s forecast for the year as a whole, Countrywide needs to achieve EBITDA of between £55m and £60m in the second half - precisely twice as much as in the first half, and well above the comparable period of 2016. Codling admits this is “a big ask” but his confidence is based on a number of factors.
Firstly he says the group will see the full benefit of cost savings made last year, worth around £10m; secondly, the housing market generally in the second half of 2017 is likely to be better than in the same period last year when the economy was recovering from the shock EU referendum result; and thirdly, Countrywide should continue to perform well in its lettings and financial services divisions.
“With all of the challenges on the front line, it is easy to forget that Countrywide continues to work hard behind the scenes to reposition its business. It is not just about dealing with fires, but building a more powerful fire engine” he tells investors.
He anticipates the rest of 2017 may see improvements in Countrywide’s lettings client retention figures, the continued roll-out of its online option for vendors, and possible opportunities to expand its financial services.
September will see the third anniversary of Alison Platt becoming chief executive of the Countrywide group.