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Foxtons and easyJet issue profits warnings following leave vote Foxtons and easyJet issue profits warnings following leave vote
(about 2 hours later)
Foxtons and easyJet have warned that the impact of the EU referendum result on consumer confidence will hit their financial performance this year. Foxtons and easyJet shares have fallen heavily after the estate agent and budget airline warned the impact of the EU referendum result on consumer confidence would hit their financial performance this year.
In a trading update, Foxtons said concerns following the vote to leave the EU will depress London property sales while easyJet warned that revenue per seat would fall more than expected as wary consumers rethink their travel plans.In a trading update, Foxtons said concerns following the vote to leave the EU will depress London property sales while easyJet warned that revenue per seat would fall more than expected as wary consumers rethink their travel plans.
Foxtons said: “Whilst it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise. We therefore expect full year 2016 group revenues and adjusted [earnings] to be significantly lower than prior year.” Foxtons shares plunged 17.5% to a record low of 111p on Monday. EasyJet shares dropped 15% to £11.15, their lowest for more than three years.
Its profit warning underlines the effect of the referendum on the UK property market, which had already slowed sharply before last week’s vote.The run-up to the vote created uncertainty that hit house sales, and Foxtons said it expects the downturn to last at least until the end of this year. Foxtons said: “Whilst it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise. We therefore expect full-year 2016 group revenues and adjusted [earnings] to be significantly lower than prior years.”
Concerns over the impact of leaving the EU caused the biggest fall in enquiries from potential buyers since the financial crisis, the Royal Institution of Chartered Surveyors reported this month. Its profit warning underlines the effect of the referendum on the UK property market, which had already slowed sharply before last week’s vote. The run-up to the vote created uncertainty that hit house sales, and Foxtons said it expects the downturn to last at least until the end of this year.
Concerns over the impact of leaving the EU caused the biggest fall in inquiries from potential buyers since the financial crisis, the Royal Institution of Chartered Surveyors reported this month.
Foxtons had a busy start to the year as property investors and sellers rushed to complete deals before stamp duty on second homes increased at the start of April. Since then, higher stamp duty and increasing uncertainty as the referendum approached caused people to sit on their hands, Foxtons said.Foxtons had a busy start to the year as property investors and sellers rushed to complete deals before stamp duty on second homes increased at the start of April. Since then, higher stamp duty and increasing uncertainty as the referendum approached caused people to sit on their hands, Foxtons said.
EasyJet’s warning followed its statement on Friday in response to the referendum result that said the vote to leave would not damage performance in the long run but failed to mention short-term trading. On the same day, International Airlines Group, the parent of British Airways, warned annual profits would be less than expected because of weak trading caused by the referendum.
In Monday’s further update, easyJet said the referendum result had added to existing problems such as cancelled flights and that it would concentrate on cutting costs to support profits.
EasyJet said: “Following the outcome of the EU referendum, we also anticipate that additional economic and consumer uncertainty is likely this summer and as a consequence it is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage compared to the second half of 2015,” easyJet said.
EasyJet said trading was difficult for European airlines in May and June and that strikes by French air traffic controllers, congestion at Gatwick airport and bad weather caused more than 700 cancellations for easyJet in June.EasyJet said trading was difficult for European airlines in May and June and that strikes by French air traffic controllers, congestion at Gatwick airport and bad weather caused more than 700 cancellations for easyJet in June.
Pre-tax profit in the three months to the end of June will be £28m lower than expected and revenue per seat will be below the guidance given last month because of the disruption and the effect of the Egyptair crash. Pre-tax profit in the three months to the end of June will be £28m lower than expected and revenue per seat will be below the guidance given last month because of the disruption and the effect of last month’s Egyptair crash.
The budget airline said the referendum result had added to its problems and that it would concentrate on cutting costs to support profit.
“Following the outcome of the EU referendum, we also anticipate that additional economic and consumer uncertainty is likely this summer and as a consequence it is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage compared to the second half of 2015,” easyJet said.