Cost cutting keeps Tullett Prebon on course

Inter-dealer broker Tullett Prebon was hit by challenging market conditions in the first half of 2012 but its decision to slash jobs kept costs under control.

Revenues for the six months to the end of June were £455.1m, almost exactly the same as the £454.8m reported at the same point last year. At constant exchange rates, and excluding the recent acquisitions of Conveno and Chapdelaine, revenue was 5% lower year-on-year.

Underlying profits before tax were down from £73.8m in the prior year to £68.3m this year while reported profit before tax slumped to £46.6m from £74.6m the year before, after the company booked exceptional charges relating to its restructuring and its legal action for alleged poaching of staff against BGC and former employees in the USA.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Terry Smith, Tullett's Chief Executive, said the results "demonstrate the strength of the business in challenging market conditions."

He also highlighted the cost savings that have been made; these amount to a reduction in headcount of 140, saving the firm £14.8m annually.

The problem for Tullett has been that, while at the beginning of the year market volatility was high reflecting Eurozone worries, between March and June activity decreased as investors became very wary about trading.

The interim dividend has been lifted to 5.6p per share from 5.25p.

Nevertheless, the market appears impressed; Tullett Prebon shares had risen 2.2% by 8:34.

BS