I thought it might be enlightening to undertake a quick comparison of JLL and CBRE's third quarter results, which were released on Tuesday and Wednesday respectively - in spite of the fact that, whenever you try and undertake this exercise, the flaks for both sides ring up in hurry and point out how, in fact, if you look at it like this, their team is actually far better than the other.
One key similarity was the fact that Colin Dyer, chief executive of JLL, and Brett White, chief executive of CBRE, said they saw signs of recovery in most territories across the globe. The picture was far from uncertain, they said, and America could lag behind Europe and Asia, as these markets were further along in terms of the property sector's recovery. But what do the raw numbers say?
In terms of the Ney York Stock Exchange, the market liked CBRE's figures better than JLL: the larger firm's shares dropped 3.5%, compared to a 7.7% fall in JLL's stock. This is probably because, while both firm's missed analyst expectations on earnings per share, JLL missed by more, earning $0.47 a share compared to street estimates of $0.58, while CBRE earned $0.04 - below the estimate of $0.10, but the company had warned shareholders to expect a figure of between 0 and $0.04.
So while JLL earned more for each share, in terms of business efficiency, both companies were remarkably similar - JLL's margin was 10.5%, while CBRE's was 10.7%. While both companies saw revenue drop from the same period last year, they have cut costs to try and keep up with this, and margins have stayed flat this year, despite the trough in the globl property market.
For both companies Europe was the worst performing region, showing the biggest falls in revenue, but as pointed out above, this region i now expected to be one of the drivers of growth. The two companies diverge somewhat in that while JLL made a $3.9m operating loss in Europe, CBRE made a $11.6m.
Both companies paid back just more than $100m of debt during the period, but here JLL is far more nimble, having £742m of outstanding debt, compared to $2.27bn. Will Marks of JMP Securities points out that, in terms of the two big acquisitions made by the companies, which have saddled them with debt, JLL's Staubach buy is going to be kicking out more cash than Trammell Crow, and sooner.
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