In a significant development in the French real estate market, Nexity, the leading real estate developer in the country, has announced that it will institute an employment protection plan (PSE) in 2024. This step is being taken to cope with the unprecedented crisis the company is facing in its primary business area, which is new real estate.
The company stated in a press release that it will commence the information-consultation process of the IRPs (staff representative bodies) in the coming weeks. This process is a precursor to the implementation of the job protection plan. As of now, Nexity has not specified the number of jobs that will be affected by this plan.
CEO Véronique Bédague, while addressing the press, stated that the company is planning to adjust its business model and operational costs. She asserted that the costs have to be reduced in order to make housing affordable for the customers.
A challenging year for the group
The group had a tough time in 2023, as its new construction activities came to a standstill due to the escalating construction costs and difficulties faced by the buyers in obtaining credit. Consequently, its accommodation reservations decreased by 19% in quantity and 24% in value. However, Nexity highlighted that its performance was better than the overall French market, which experienced a 26% drop in quantity.
The company’s revenue also saw a 9% dip to reach €4.27 billion, slightly missing its target of €4.3 billion which was revised midway through the year.
Furthermore, the group has decided not to pay a dividend to its shareholders, contrary to its previous intention of offering a minimum payment of €2.50 per share.
Plan to sell off services branch
In order to recover from what it refers to as a ‘low point’ and manage its debt, Nexity has sold its subsidiaries in Portugal and Poland. Moreover, the group is keen to sell its services branch.
In late 2023, Nexity revealed that it was in exclusive talks with Bridgepoint, an investment firm, to sell its property administration branch. This division, which provides trustee and rental management services, is valued at €440 million and employs nearly 3,100 people, which constitutes more than a third of Nexity’s workforce. The company is still seeking buyers for its corporate real estate management and distribution operations.
Nexity managed to reduce its net debt from €820 million to €776 million. The company aims to bring this figure below €500 million by the end of 2025. However, it is not setting any specific financial targets for 2024, as it is waiting to see how interest rates and public policies evolve. The group is optimistic about a recovery in 2025.
A “deep transformation”
CEO Véronique Bédague stated that at the current stage, the company is being cautious. She pointed out that while there could be some improvement, it is uncertain when the rates will decrease and to what extent.
In addition to the social plan, she promised a thorough transformation of Nexity’s organizational structure and the way the company functions.
The group intends to decentralize its operations significantly, so as to come up with the best mix of products for each location in the country, as per the CEO.
Nexity is also planning to speed up its activities in ‘urban regeneration’, which involves transforming already built spaces. This move is aimed at meeting the legal requirements of achieving ‘zero net artificialization’.
