July 28, 2010 / 12:44 PM / 8 years ago

UPDATE 3-FirstService posts Q2 profit, cautious on Europe

* Q2 EPS $0.08 vs loss/shr $0.08

* Revenue up 18 pct

* Says visibility for CRE weak beyond Q3 (Recasts; Adds conference call details, updates share movement)

July 28 (Reuters) - Canadian property manager FirstService Corp (FSV.TO) FSRV.O swung to a quarterly profit, helped by growth at its commercial real estate services (CRE) segment, but said it sees continued weakness in Europe.

The operating environment across Central and Eastern Europe continues to be very difficult, as transaction activity was up only marginally from corresponding 2009 figures, chief operating officer Scott Patterson said on a conference call.

“In the Americas, we expect to see year-over-year improvement for the third quarter, but are somewhat cautious about our outlook for the fourth quarter and beyond,” he added.

FirstService, which draws about 40 percent of its revenue from the CRE segment, said visibility for the unit was weak beyond the third quarter.

The company operates mainly in North America, Latin America, Asia Pacific and Europe.

FirstService, which has been growing through acquisitions, bought New York-based Goodstein Management on Tuesday, adding to its residential property management segment.

“Over the next year, we hope to complete several smaller acquisitions,” Patterson said.

Analyst Sheila Broughton of PI Financial said further acquisitions would drive about half of the company’s growth in the coming quarters.


For the second quarter, net earnings attributable to common shareholders was $2.3 million, or 8 cents a share, compared with a net loss of $1.9 million, or 8 cents a share, a year ago.

On an adjusted basis, the company earned 48 cents a share.

Revenue rose 18 percent to $501.4 million, driven by 52 percent rise in CRE revenue.

Revenue from its residential property management and property services segments were relatively flat for the quarter.

Analysts on average were expecting the company to earn 50.3 cents a share, on revenue of $455.1 million, according to Thomson Reuters I/B/E/S.

The company, which operates its CRE segment under the Colliers International brand, said it will spend more than half of its $30 million capital expenditure on the unit. The U.S. commercial real estate, which has been struggling since late 2007, rebounded in the second quarter due mainly to a pickup in building sales and leasing. [ID:nN27121294]

FirstService shares, which have gained about 11 percent year to date, were up 6 Canadian cents at C$22.62 Wednesday afternoon on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Vyas Mohan, Roshni Menon)

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