By Digby Larner
Of DOW JONES NEWSWIRES
U.K. interdealer broker ICAP PLC (IAP.LN) said Thursday that because of continued investment in new business activities it expects pretax profit in its fiscal first half to be slightly lower than in the same period a year earlier.
But it said that as a result of higher market activity, group revenue should increase by around 6% over the same period.
ICAP said pretax profit for the fiscal full-year ending March 31, 2010, excluding amortization, impairments and exceptional items, should be in line with analyst forecasts of GBP309 million to GBP354 million. That compares with GBP346 million reported in the fiscal year 2009.
Chief Executive Michael Spencer said: "We made a solid start to the year across many markets ahead of a pronounced seasonal slowdown during the summer. Higher market activity levels have now returned."
He said many of the markets ICAP operates in are benefiting from continuing low short-term interest rates, steep yield curves and substantial corporate and government bond issuance.
"Both credit and equity derivatives have experienced more difficult conditions. Overall activity levels in commodities have remained strong," Spencer said.
He said that in electronic broking, markets have been quieter than a year ago, although cost cuts and other measures have helped to hold margins.
"Our investment is continuing in new organic initiatives to support the long-term growth of this business and in IT to further enhance the existing competitive advantage of our electronic broking platforms," Spencer said.
ICAP said it made further cost cuts of GBP23 million for the 2009/10 fiscal year and that some of this was offset by investment in development areas.
ICAP shares closed Wednesday at 423 pence. They have risen by 47% since the start of 2009 and are up 19% over the last year.
The company reports full results Nov. 17.
Company Web site: www.icap.com
-By Digby Larner, Dow Jones Newswires; +33 1 4017 1748; digby.larner@dowjones.com