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LSL Property Services PLC on Friday warned of uncertain market conditions in the second half of 2022 and said it expects full-year profit to be ‘slightly’ behind the record number achieved in 2021.
The Newcastle-based estate agency explained that annual profit is going to be lower due to a slower-than-anticipated deal flow in its Pivotal Growth business and a hit from cost inflation.
Pivotal Growth is a joint venture between LSL and Pollen Street Capital Ltd. It announced the acquisition of Loan Partnership Ltd for an undisclosed sum on Tuesday.
‘Whilst there is a good pipeline of deals, and we remain confident of the medium-term prospects for value creation, completion of acquisitions has been slower than expected, and as a result Pivotal Growth has remained in an investment phase for longer than previously anticipated,’ LSL said.
LSL previously expected to deliver 2022 results ‘broadly in line’ with 2021, with the reduced levels of activity in its markets.
In 2021, the company recorded revenue of £326.8 million and a pretax profit of £22.0 million.
However, recent market estimates indicate that residential pipeline conversion rates will improve, leading to annual house purchases not being ‘materially behind previous expectations,’ it said.
‘We expect that the impact of housing market cycles will continue to have a reducing impact on the group's results,’ it said.
LSL generated revenue of £104.5 million in the first four months of 2022, in line with a year before. It recorded a particularly strong performance by its Surveying division, where revenue was up 11%, year-on-year.
Looking ahead, it still warned about uncertainty over the pace of housing transactions and cautioned that they may impact the second half of the year.
Shares were down 3.4% at 345.00 pence each on Friday morning in London.
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