Cushman & Wakefield, JLL profits slide by more than 90%

Cost cutting imminent

JLL's Christian Ulbrich and Cushman & Wakefield's Michelle MacKay (JLL, Cushman & Wakefield, Getty)

Rachel Herzog

Aug 3, 2023, 6:30 PM

It was a brutal second quarter for two giant Chicago-based brokerages.

JLL’s net income last quarter was a fraction of what it was during the same period last year, dropping to $3.2 million from $335.5 million. Equity losses were a major factor, totaling $103.5 million last quarter compared with $53.6 million in earnings in the second quarter of 2022.

CEO Christian Ulbrich on Thursday’s earnings call described the markets as “muted” and attributed limited transaction volumes to the higher cost of capital, tighter lending standards and elevated price uncertainty.

JLL’s adjusted EBITDA was $116.1 million, compared to $359 million in 2022.

At Cushman & Wakefield, net income last quarter was $5.1 million, down from $97.2 million in the second quarter of 2022. The brokerage’s adjusted EBITDA was $146.1 million, down from $262.8 million in 2022.

“In challenging market conditions, we were able to quickly pivot and deliver strong financial results with sequential improvement in revenue, EBITDA and margin,” Cushman CEO Michelle MacKay, who recently stepped into the top role at the brokerage, said on the Monday call.

Cushman this week announced $40 million in cost cutting measures for the year, in addition to a $90 million cost-cutting program the brokerage had previously announced. The brokerage realized $49 million in savings in the first half of 2023 and expects to save a total of $130 million this year, chief financial officer Neil Johnston said on the call.

Cost cutting is ongoing at JLL, too, after the brokerage started trimming its workforce last year. The firm has reduced its annualized fixed costs by $201 million in total, $170 million of which is expected to be realized this year.

“The cost actions are structural in nature and largely focused on non-revenue generating roles that we identified as part of the global realignment of our business lines last year,” JLL chief financial officer Karen Brennan said on the call.

About 20 percent of the $130 million in Cushman’s cost cuts is temporary and will be primarily infrastructure and overhead costs, while 10 percent will come from general administrative costs, Johnston said.

“As we go into next year, if we don’t see conditions improve, we can always hold out and not let those temporary costs come back into the business,” Johnston added.

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