CBRE Group Inc (CBRE, Financial) released its Q3 2023 earnings report on October 27, 2023. The company reported a decline in both GAAP and Core EPS, attributed to significant pressure in the commercial real estate capital markets and a slowdown in property sales and debt financing activity. Despite these challenges, CBRE's resilient businesses saw solid growth in the third quarter, led by Global Workplace Solutions.
Financial Performance Overview
CBRE reported a 4.5% increase in revenue to $7,868 million in Q3 2023 from $7,530 million in Q3 2022. However, net revenue declined by 4.2% to $4,430 million. GAAP net income and GAAP EPS saw significant declines of 57.3% and 55.6% respectively. Core adjusted net income and Core EPS also declined by 38.2% and 35.7% respectively.
Segment Performance
The Advisory Services segment saw a decline in revenue by 17.3% to $2,013 million and a decline in segment operating profit by 34.6%. The Global Workplace Solutions (GWS) segment reported a 16.6% increase in revenue to $5,649 million and a 14.5% increase in segment operating profit. The Real Estate Investments (REI) segment reported an 18.4% decrease in revenue to $210 million and an 88.9% decrease in segment operating profit.
Capital Allocation and Leverage
During Q3 2023, CBRE reported a free cash flow of $306 million, reflecting cash provided by operating activities of $382 million, less total capital expenditures of $76 million. The company repurchased approximately 6.2 million shares for $516 million during the third quarter of 2023. As of September 30, 2023, the company had approximately $1.5 billion of capacity remaining under the company’s authorized stock repurchase program.
Outlook
CBRE now expects 2023 core earnings-per-share to decrease by mid-30%, compared with a 20% to 25% decline anticipated when the company reported second quarter 2023 results 90 days ago. The reduced outlook is almost entirely attributable to the company’s interest-rate sensitive businesses. The company believes 2023 will be the trough for earnings.
Explore the complete 8-K earnings release (here) from CBRE Group Inc for further details.
