Global Business

U.K. Firms’ Shares Tumble on Brexit Concerns

Real estate firm Foxtons and the easyJet airline both predict negative fallout from the U.K.'s vote to leave the European Union.
Katie Kuehner-HebertJune 27, 2016

U.K. firms Foxtons and easyJet saw their shares tumble Monday after they warned investors that profits this year could be hurt in the fallout of the Brexit vote.

London-based real estate firm Foxtons said the run-up to the referendum created “significant uncertainty” across London residential markets and the decision to leave the European Union “is expected to prolong that uncertainty.”

While Foxtons had been expecting a rally in property sales in the second half of this year, it now says that is unlikely to materialize, with 2016 revenues and earnings expected to be significantly lower than 2015.

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“Recent sales volumes have been slow as uncertainty and higher stamp duty has led many buyers and sellers to sit on their hands,” CEO Nic Budden said in a news release. “The result of the referendum has increased uncertainty and is likely to mean that these trends continue for at least the remainder of the year.”

Luton-based airline easyJet, whose revenues and profit had already been hit by cancellations due to a traffic controllers’ strike, the recent Egyptair crash and other issues, also predicted some negative fallout from Brexit.

“Additional economic and consumer uncertainty is likely this summer and as a consequence it is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage compared to the second half of 2015,” the company said.

Recent movements in fuel prices and exchange rates are also expected to depress easyJet’s results for the first six months.

Foxtons’ shares lost 25% of their value on Monday, reaching a record low of 1.01 pounds – more than 56% lower than their 230p float price in October 2013. EasyJet shares dropped more than 22% to a three-year low of 10.66 pounds on investor concerns about the threat to the airline’s membership of the single European aviation market.

“City analysts said more companies would warn on profits in coming weeks, reflecting the impact of the referendum result on their business or taking the chance to soften up expectations and blame Brexit for weak trading,” The Guardian wrote.

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