Countrywide sinks 25% after benefit caution

Image: Countrywide says online agents don't have the costs of running high street offices

Shares in Countrywide dropped more than 25% after Britain's biggest estate agent issued a profit warning .

The company, which owns Hamptons and Bridgford estate agents, said the property market was "subdued" and it would raise more money to cuts its debt.

Countrywide shares fell 26.8% to a record low of 57.5p in early trading.

Russ Mould, investment director at AJ Bell, said: "Estate agent Countrywide is facing three big challenges at present which are reflected in a new profit warning.

"The housing market is weak; its industry is facing disruption from online competitors which don't have the costs of running high street offices; and the company is carrying too much debt."

As a result, the company said it would reduce its £192m debt pile by at least 50% by selling more shares.

Its biggest shareholder Oaktree Capital Management and other lenders have thrown their weight behind the plan, the troubled estate agent said.

"Addressing the balance sheet issues is a must as until then there will be a question mark over whether the business is being run in the interests of shareholders or creditors," Mould said.

Countrywide said it now expects earnings to fall by about £20m in the first half and does not expect the shortfall to be recovered in the second half.

"The market in the first half has continued to be subdued and we have experienced longer transaction cycles," Countrywide said.

"Our focus remains on building back the sales pipeline and we expect to substantially close the pipeline gap by the end of the year."

More from Housing

• Single first-time buyers need 17 years to save for London deposit

• Leasehold homeowners 'hit by permission fees when making improvements'

• Rogue landlords 'should have houses confiscated'

• Rip-off leasehold reforms 'don't go far enough', say campaigners

• 'Nimby' councils which fail to build enough new homes will lose planning powers

• Corbyn doubles pledge to help homeless on first day as Prime Minister

A reluctance to pay stamp duty and Britain's decision to leave the European Union is hurting the housing market, analysts believe.

In March, Countrywide said it would cut a third of its 450 central office team as it swung to an annual loss and warned of further pain in 2018.

Original Article

Business

November 25, 2018