New McGrath CEO Geoff Lucas has put the industry on notice to be realistic in its recovery expectations of the troubled company, saying that while the agency is embarking on a turnaround, it won’t be like flipping a light switch from off to on.
“It is about putting strategies in place and investing in certain areas,” Mr Lucas told REB.
“And we are looking for benefits in the short to medium term, rather than immediately.”
His comment comes in the wake of McGrath Limited providing a trading update to the ASX on Monday, 12 March.
The trading update advised that the board has conducted a review of the company’s accounts and operations and that it now expects to generate underlying EBITDA for the financial year ending 30 June 2018 in the range of $5.0 million to $5.5 million. The update said that this equates to a reported EBITDA of $1.0 million to $1.5 million after approximately $4 million in expected one‐off cash costs.
Mr Lucas said that the purpose of the trading update was to bring the market up to date with the company’s current view and in accordance with its continuous disclosure obligations.
“It is important that the market is aware of the right baseline financial position that appropriately reflects the current status of the McGrath business and trading conditions.
“The impact of reduced sales volumes has affected the company more significantly than the prior forecast contemplated. We are pleased that this period is behind us, and [we] are encouraged by current activity levels generating improved results.”
Mr Lucas said that at its core, the McGrath business is a “high-quality” and “well-respected” real estate agency.
“The new board and CEO are harnessing the capacity and skills of the existing management team which has injected a revitalised energy into the business,” Mr Lucas said.
“The cost-cutting program put in place late last year is starting to generate the financial benefits expected, and we are seeing an uplift in performance so far this month, with expectations of continued rebuilding to the end of this financial year.”
Mr Lucas said that the refocused recovery plan is centered on three key initiatives: the right corporate office structure; high-quality new recruits; and the rollout of “industry-leading” training, development and systems.