McGrath half yearly profit slumps after an 'uncharacteristically large' number of its agents quit

Photo: iStock.

Real estate business McGrath’s half yearly earnings slumped 72% as fewer homes come on the market and a number of its agents quit.

Pro forma net profit dropped slumped to $2.4 million in the first half from $8.5 million a year earlier. Revenues fell 8% to $66.9 million, Australia’s only publicly listed real estate agency said. Operating profit fell 37% to $9.3 million.

McGrath shares haven’t traded above their late 2015 initial public offering price of $2.10 so far as its performance has struggled to meet expectations. The shares closed Wednesday at 64 cents.

“We have commenced a strategic review with a renewed focus on improving productivity and performance of each of our existing segments and McGrath is exploring new revenue opportunities,” Chairman Cameron Judson said. “Our aim is to grow the relative contributions of our annuity businesses and de-risk the volatility of our earnings.”

This slide from McGrath’s earnings presentations provides a snapshot of the firm’s first half.

The company said in January it had an “uncharacteristically large” agent churn, especially over Christmas and New Year.

McGrath raised $129.6 million through a December 2015 IPO. In April, it issued a profit warnings after an unforeseen low volume of listings and sales in the first half of April, particularly in the north and north-western suburbs of Sydney. The company late last year warned that challenging market conditions were expected to continue in 2017.

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