CB Richard Ellis Group Inc., the world’s largest commercial real estate service company by revenue, posted a second-quarter net loss on Wednesday compared with a year-ago profit, as leasing and sales declined sharply.
The company said it had a net loss of $6.6 million, or a loss of 2 cents per share, compared with a profit of $16.6 million, or 8 cents per share, a year ago.
Excluding one-time charges, the company had net income of $9.7 million, or 4 cents per share, meeting analysts’ average forecast, according to Reuters Estimates.
Charges of $22.5 million were related to severance, lease write-offs, contract terminations and write-offs of finance expenses.
The company also raised its cost reduction target to an annual rate of $575 million to $600 million, from its prior goal of $475 million to $500 million.
Revenue fell 27 percent to $955.7 million, compared with analysts’ average forecast of $959.58 million.
"Revenue was generally in line with the results posted in fourth quarter ’08 and first quarter ’09, indicating conditions don’t appear to have weakened further," said JMP Securities analyst Will Marks said. "However, cost cutting was a huge surprise. Based on the guidance, CB will cut more than 25 percent and as much as 30 percent of its peak level fixed costs."
Tight credit and the recession have clobbered the global commercial property market as retailers close stores, and businesses cut jobs and scale back on space. This has stripped the company of its much of its most profitable business, leasing and sales.
The company is scheduled to hold a conference call on Thursday. Marks said he is awaiting to hear of any signs of improvement in sales and leasing the company may have seen.
"When those two areas improve, CB will have a tremendous amount of leverage to recover," he said.
Shares of CB Richard Ellis on Wednesday closed down 4.7 percent, or 49 cents, at $9.93 on the New York Stock Exchange, and were unchanged after hours. Since the beginning of the year, the shares are up almost 130 percent.
(Reuters)
