27th Feb 2015 12:43
LONDON (Alliance News) - Shares in Rightmove PLC surged higher on Friday after the company reported higher pretax profit and revenue in 2014 and said it is shrugging off the challenge of newly-launched portal OnTheMarket.
Shares in the online property portal were up 13% on Friday to 3,021.00 pence, easily the best performer in the FTSE 250, after it said its pretax profit rose to GBP122 million from GBP97 million in the year to the end of December, boosted by an increase in revenue to GBP167 million from GBP139.9 million.
The group said traffic to its website grew 10% in the year to 15.4 billion page views, up from 14 billion a year ago, while its average revenue per advertiser increased by 13% to GBP684 per month, driven by customers spending more on its additional advertising products. It also said the number of agency and new homes advertisers increased 5% to 19,304 from 18,425 last year.
The group hiked its final dividend to 22 pence per share from 17 pence, bringing its total dividend to 35 pence per share from 28 pence in 2013.
"Rightmove's popularity with the British home moving public has gone from strength to strength as more home movers visited more often and spent more time on Rightmove than ever in 2014," said Rightmove Chief Executive Officer Nick McKittrick.
McKittrick said its performance has continued to be strong in the first months of 2015, with 100 million visits and 1.5 billion property page views in January "as more home movers visit the only place with one million properties in the UK".
"We are delighted that nearly every agent in the UK has chosen to remain on Rightmove following the recent launch of a new entrant, OnTheMarket.com, cementing Rightmove as the best property advertising option in the UK. As at the end of February customer numbers were unchanged from our record year end position," Rightmove said in a statement.
The robust performance so far in 2015 is in line with widely-held view that Rightmove has proved more resilient to the challenge of OnTheMarket, the newly-launched property portal, than its rival Zoopla Property Group PLC.
OnTheMarket has been launched by Agents Mutual, a cooperative formed by a group of estate agents in the UK, and requires agents listing on its site to remove their listings from either Rightmove or Zoopla.
In a trading statement published earlier this month Zoopla dismissed the challenge posted by OnTheMarket, but saw its shares plummet as its total advertising members fell 1% to 16,597 at the end of January, indicating that OnTheMarket has taken a bite out of its listings.
But Zoopla Chief Executive Officer Alex Chesterman dismissed the threat posed by OnTheMarket, saying the launch of the new portal "remains a short-term event", adding its "success will be determined by whether consumers engage with it".
Chesterman's statement sparked a defensive response from OnTheMarket Chief Executive Ian Springett. "We are confident in becoming the number two portal within a year to replace Zoopla. Zoopla's reference in this morning's trading statement describing the launch of OnTheMarket.com as a 'short term event' demonstrates just how out of touch it is with the commitment of our member agents to create a superior market-leading, mutually-run, property portal," Springett said.
Rightmove said the current outlook for the UK online property market remains positive amid the increasing shift among consumers to digital platforms and a continuing transition in the market away from traditional property advertising models.
Brokers agreed that Rightmove appears to be showing greater resilience to the OnTheMarket challenge.
Numis said the impact on Rightmove's customer base following the launch of OnTheMarket has been negligible, noting its customer numbers at the end of February were at the same level as the year-end.
Liberum went a step further than Numis, saying the launch of OnTheMarket has actually helped Rightmove, given that 90% of OnTheMarket's agents have left Zoopla. Liberum says this both strengthens Rightmove's leading market position and makes those agents with OnTheMarket more dependent on it.
Numis reiterated its Buy rating on the stock and hiked its price target to 3,445 pence from 3,397 pence, while Liberum reiterated its Buy and held its 2,910 price target.
By Sam Unsted; [email protected]; @SamUAtAlliance
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