LSL Property Services, one of the largest providers of mortgage and valuation services, has continued its strong start to 2024, surpassing analyst expectations and announcing a £7m share buyback plan.
The group reported underlying operating profit 74 per cent lower than the year before, at £9.3m, but this was still £300,000 ahead of analyst forecasts.
Meanwhile, LSL Property’s adjusted earnings per share came in 72 per cent below what it had been last year.
While this may seem like a significant drop, high interest rates and a slowdown in the house buying market thanks to the cost of living prices had threatened to decimate some mortgage businesses.
The company, which owns Your Move and Reeds Rains estate agencies, was forced to warn on its profits last year after “significant changes in the mortgage market”.
However, last month the group hiked its expectations after it said that mortgage applications over the first two months of the year are “significantly ahead” of forecasts.
“Better market sentiment and a normalisation in product mix in the wider mortgage market has resulted in a strong start to the year,” said Peel Hunt analysts Sam Cullen and Clyde Lewis
After reporting net cash of £35m, also ahead of forecast, LSL Property said it had reviewed its capital allocation policy and would be launching a £7m buyback.
Cullen and Lewis added that the group was “well placed to exploit more normal market conditions, without the inherent cyclically of an owned estate agency network”.
David Stewart, group chief executive of LSL Property Services, said that 2023 marked “a period of significant progress in our transformation to a higher margin, less capital-intensive business that will perform more consistently through market cycles”.
“Against the backdrop of very challenging market conditions, we have simplified and restructured our financial services and estate agency businesses. Both are now focused on business-to-business services with a significantly lower cost base and the potential for higher free cash flow generation.”