Shares in listed real estate group McGrath took another hit on Thursday as it warned "challenging" market conditions were likely to continue after reporting a 72 per cent dive in half-year pro-forma profit to $2.4 million.
Statutory net profit for the company, which listed in December 2015, was up from $421,000 to $2.7 million for the six months to December 31, including the benefits of acquisitions.
Pro-forma revenue fell 11 per cent to $66.9 million. McGrath declared a fully franked dividend of 1¢ a share.
The company's shares closed 4.69 per cent lower at 61¢, having fallen as much as 7 per cent during the day.
The high-profile agency last month warned that "unprecedented low volumes of listings" it highlighted at November's annual shareholder meeting had shown no sign of improving and said analysts' estimates of its full-year profit outlook were too optimistic.
In a statement on Thursday, McGrath said company-owned listings were down 20 per cent in the half and challenging market conditions were expected to continue.
It had started a strategic review focusing on improving the productivity and performance of its existing business segments, and exploring new revenue opportunities.
"Our aim is to grow the relative contributions of our annuity businesses and de-risk the volatility of our earnings," chief executive Cameron Judson said.
Mr Judson said home owners were reluctant to sell as they feared prices would move out of reach in their chosen area in the time it took to get back into the market.
"There is something of a catch-22 currently as existing home owners, who might want to sell and realise a big capital gain, are hesitant to do so given any time out of the market risks watching a new target property gallop away from them in terms of price appreciation," he said.
"'There are plenty of stories of those who locked in capital gains on their house only to
"That's why McGrath has welcomed the housing affordability debate and calling for stamp duty reform – particularly in NSW."
Bell Potter and JPMorgan were joint lead managers of McGrath's float, which had an offer price of $2.10.
However, the stock never reached those heights, peaking at $1.89 in the days after it listed. Following an earnings downgrade by the company in April due to falling home sale listings, the share price plunged 30 per cent in one day to 90¢.
Bell Potter said in December it was still unclear if and when a rebound would occur and if some structural reform was required, such as lower stamp duty.
"We now forecast 2017 earnings ... [EBITDA] of $20.9 million," the broker said.
The cuts to profit forecasts came a week after McGrath held its maiden annual shareholder meeting in November, where chairwoman Cass O'Connor said the market in Sydney was very poor.
"It was as though every vendor woke up in the new year and made a resolution not to sell," she said.
In August, John McGrath, dubbed "Mr Sydney Real Estate", stepped down as chief executive of the group he founded in 1988. He is now an executive director with Cameron Judson, the new chief executive.
Over the course of its first year as a listed group, the company has lost a number of its high-profile agents, although the McGrath Equity Incentive Plan, is aimed at attracting and hold the real estate talent needed to grow the business.
