LSL has reported a 16% drop in estate agency residential exchange income but says it is sales pipeline is at record levels.
A trading update from the listed agency brand this morning revealed that group revenue over the first four months of 2022 was £104.5m, which is in line with that achieved in buoyant markets in the same period in 2021.
The Board is particularly pleased with the strong performance of our Surveying Division where revenue was up 11% year on year.
The update said: “The Estate Agency Division consolidated the market share gains made during 2021, maintaining our share of instructions in the locations we trade, and growing our market share of housing transactions on a national level.
“Our Estate Agency and our Direct-to-Consumer Financial Services businesses were naturally affected by residential pipeline conversion rates which remained extremely slow across the market principally due to the continuing industry-wide capacity issues in conveyancing.
“This resulted in a 9% reduction in Estate Agency Division revenue largely driven by a fall of 16% in residential exchange income. Fall-through rates remain at normal levels, meaning that the residential sales exchange pipeline now stands at nearly record levels, having increased by over £4m since the beginning of the year.”
“Geopolitical uncertainties remain which have added to inflationary cost pressures, particularly in relation to energy and employee costs. We continue to focus on proactive management of our cost base, to limit the impact of these pressures, and consequently expect these pressures to have only a modest impact on profitability.”
It warned that overall profits are expected to be slightly behind its record results of 2021, attributed to slower than anticipated deal flow.
LSL said: “At the start of the year, we expected to deliver full year profits at broadly the same level as our record results in 2021, in markets with reduced levels of activity.
“Recent market estimates indicate that residential pipeline conversion rates should improve resulting in full year 2022 house purchases not being materially behind previous expectations.
“Assuming activity is in line with these estimates, overall profit is expected to be slightly behind the record profits posted in 2021, principally reflecting slower than anticipated deal flow in Pivotal Growth, and the limited impact of cost inflation noted above.
“We have yet to see clear evidence of a sustained improvement in residential pipeline conversion and should the current slow conversion rates across the market persist or fall throughs increase, then more significant pressure would be placed on profits in our Estate Agency Division and to a lesser extent in our Financial Services businesses.
“Whilst uncertainty over the pace of housing transactions may impact the second half of the year, we are encouraged by continued progress we are making in the execution of our strategy.
"This year's performance demonstrates the benefits of both our growth strategy in Financial Services and the significant progress made in our Surveying Division, and we expect that the impact of housing market cycles will continue to have a reducing impact on the Group's results.”