easyJet and Foxtons Issue Warnings on Profit After Brexit Vote
easyJet and Foxtons shares dropped heavily after the budget airline and real estate agent warned that the impact of the referendum vote to leave the European Union on the consumer confidence would hit the two companies’ financial performance in 2016.
Foxtons in one of its trading updates said the concern following the UK vote to pull out of the EU will depress property sales in London and easyJet warned revenue per seat would drop more than was previously expected as consumers rethink travel plans.
Shares of Foxtons plummeted by 17.5% on Monday, while shares of easyJet were down by 15% hitting their lowest price in over three years.
Foxtons said that while it was very early to predict accurately how the property markets in London will responded, an upturn that was expected during the second six months of 2016 is now very unlikely to come to fruition.
Foxtons said it expected its full year group revenues as well as adjusted earnings for 2016 to be substantially lower than in prior years.
Its warning on profit underlines the effect the referendum has on the property market in the UK that already had slowed quite sharply prior to last Thursday’s vote.
The days leading up to the referendum vote created great uncertainty that hit home sales and Foxtons is expecting the downturn to take at least until the end of 2016 to bottom out.
Concerns over what will happen when the UK leaves the EU caused the largest drop in real estate inquiries from possible buyers since the 2008 financial crisis, said a report early this month.
Foxtons started busy in 2016 as investors as well as sellers in real estate rushed to finish deals prior to stamp duty increasing on second homes at the beginning of April.
Since that time, the higher duty and the increased uncertainty over the referendum caused many to sit and wait.
The warning by easyJet followed its Friday statement that said the referendum vote to exit the EU would not be damaging to its performance over the long run, but did not mention the short term.
That same day, British Airlines parent company International Airlines Group warned that annual profits would drop and be less than what had been expected due to the referendum causing weak trading.
In a further update on Monday, easyJet said the result of the referendum had added to problems that had already existed such as flight cancellations and it would be concentrating on cutting costs in order to support profit.