IG Group Trading Up On Global Growth
December 11, 2009Peter No Comments »IG Group alleviated sector-watchers yesterday with a good trading update that put the missed targets rival London Capital warned on earlier in the week firmly in the rear view mirror.
The FTSE 250 listed company stated that it expected revenues for the 6 months to November to be up 13% on last year’s period at around £143m while pre-tax profits should come in 32 percent higher than the first half of 2009 at about £77m. This compared very well to the slowdown experienced by London Capital Group which stated that it expected profits for the year to be below forecasts.
Isabel Green, analyst at UBS, said IG Group’s figures had beaten forecasts and were an indication that the ‘growth story is still very much intact’. Justin Bates at Daniel Stewart said the statement ‘reaffirms the quality of the IG Group model. ‘The strong performance is a reflection of its scale and its geographic and product diversity.’
IG said the growth over the second quarter had hit 12 percent against strong comparatives from last year, which included the financial market traumas of last October. In the UK, revenues came in at around £80m a figure the company said was ‘similar’ to the same period last year.
Much of the positive news came from the group’s various international operations. The Australian business saw first-half growth of 64 percent, achieving revenues of £22m; IG’s European offices achieved combined revenues of £22m, up 65 percent on 2009; and the Singapore offshoot saw revenue growth of 22 percent to £5m.
Best known for IG Index, which allows punters to place bets on movements in shares, currencies and commodities, the Group said it had come under pressure in its domestic market as British clients suffered from a greater exposure to financial stocks. But excluding Japan, customers opened 32,000 accounts globally in the first half, approximately the same number as in that period the year before when the figures were given a significant short-term boost by the turbulent events of last September and October.
The only black spot came in Japan with the company’s troublesome FXOnline (FXO) business – in which IG bought a controlling stake in the company for £112.2m in September 2008 – where the company has been hit by strong competition in the forex market. FXO made £11m in the half, compared to earnings of £10m in the two months of the same period last year when the company was under IG ownership.
The company said yesterday that the FXO business had now moved to a new low fixed-spread model and that the early signs were “encouraging” with the number of clients dealing and the average number of transactions per client now on an upward trend.
The company said its doubtful debts for the first half of 0.5 percent had been significantly reduced compared to the figure from last year of 12 percent. Operating costs, they added, will rise in the second half as the company embarks on additional investment, particularly in terms of headcount, reflected in higher than expected activity levels and increased marketing expenditure.
Comments: IG Group is a solid company with a superb trading platform and they are proving to be still way ahead of their closest competitors.
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