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McGrath Hit With $63 Million Loss in 'Challenging' Housing Market

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ASX-listed real estate agency McGrath has suffered through a transitional period, reporting a loss of $63 million for the year to June 30.

Revenue was down 23 per cent to $99.2 million but underlying EBITDA of $5 million hit guidance.

In comparison, McGrath made $129 million in 2016-17 and $121 million in 2015-16.

Impairment charges, largely against its company-owned agencies, of $59.4 million and one-off restructuring costs of $4 million drove its bottom line loss.

The high-profile real estate agency has been hit by difficult market conditions, lower sales volumes and the departure of some key sales agents.

McGrath lost 100 high-earning agents over the year taking its headcount to 558, and also saw a decrease in franchisee offices.

The agency also earlier this year cleaned out its board of directors and replaced the CEO following a dip in earnings.

McGrath's new CEO Geoff Lucas has outlined a need to introduce a range of strategic initiatives related to learning and development, data drive technology improvements and assessment of select acquisitions to help stop the rot.

“We are committed to, and focused on, restoring our industry-leading position,” Lucas said.

“With an industry-leading team and unmatched knowledge of the market deployed over 30 years, we believe that the company's most difficult days are behind it.”

“The last quarter of FY18 saw the beginning of stabilisation, and we are in the midst of a business turnaround.”

During the year, McGrath secured a significant $10.7 million investment from Chinese property giant Aqualand at an issue price of 42.5¢ per share, providing the business with additional capital.

Aqualand is now McGrath's second largest shareholder.

The company's largest shareholder is agent John McGrath with around a 22 per cent holding.

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Article originally posted at: https://theurbandeveloper.com/articles/mcgrath-hit-with-63-million-loss-in-challenging-housing-market