CMC Markets revises downwards revenues forecast

Maria Nikolova

The company now expects CFD and spreadbet revenue to be around 25% – 35% lower year-on-year, compared to previous guidance for approximately 20% reduction year-on-year.

Online trading services provider CMC Markets Plc (LON:CMCX) has earlier today published a trading update for the period from January 1, 2019 to February 22, 2019.

The broker says it continues to adapt its business in response to changing client behaviour following the implementation of the ESMA intervention measures which got into effect on August 1, 2018.

As previously announced, market conditions improved in the third quarter, which drove an improvement in CFD net revenue performance. However, following an encouraging start to the final quarter, market conditions have been challenging from a revenue perspective in January and February 2019.

Client turnover has decreased due to narrower daily ranges in major products, although client money continues to remain strong and active clients remain stable.

Depending on the trading conditions in the remainder of the quarter, CMC Markets now expects CFD and spreadbet revenue to be between c. 25% and c. 35% lower year-on-year, compared to previous guidance for a c. 20% reduction year-on-year.

There is no change to the Group’s outlook for FY 2020 net operating income, which the Board expects to be in line with current market expectations.

Let’s recall that, during the first half of FY19, CMC Markets registered a statutory profit before tax of £7.2 million, down 76% on prior year (H1 2018: £29.8 million). Profit after tax was £7.8 million, down 69% against the equivalent period a year earlier (H1 2018: £25 million). Basic earnings per share were 2.7 pence in H1 2019 (H1 2018: 8.7 pence).

During the six months to September 30, 2018, operating expenses rose 6% to £62.7 million (H1 2018: £59.3 million), mainly due to investment in the stockbroking business and higher fixed salary costs across the Group. Revenue per active client fell 22% year-on-year to £1,413.

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