IG Group blames softer market as revenue dips in H1

While headline figures show declines for IG Group, actions taken during H1 could support growth in the longer run.

In October, IG Group announced it is to reduce its global staff headcount by approximately 10%. This is part of wider plans to simplify and streamline its business, with around 300 jobs set to go before the end of FY24.

IG Group said the decision to streamline follows a review of cost efficiency opportunities. This was mentioned by the group during its first quarter results announcement.

Last month also saw a change of leadership with former Paddy Power Betfair chief executive Breon Corcoran becoming CEO. Corcoran officially takes over on 29 January replacing Charlie Rozes, group chief financial officer who has been serving as interim CEO for several months.

Former CEO June Felix stepped down in September, having initially taken a period of medical leave in July.

Reflecting on H1, Rozes was largely upbeat about the future for IG Group, referencing its cost-saving plans. 

“It’s encouraging to see the benefits of our diversification strategy paying off, despite a mixed trading backdrop for our clients, driven by persistently low levels of market volatility in Q1 and Q2,” Rozes said.

“While some of our businesses saw revenue weakness, others achieved strong results in the period. Our exposure to a wider range of revenue drivers will underpin further growth in the group as we deliver on our strategy. 

“At the same time, we’ve taken action to control growth in the cost base, significantly reducing the rate of cost growth from FY23, yet still making selective investments in the business. As a result, we’ve maintained attractive profit margins in the period.”

IG Group reports declines across all segments

Taking a closer look at results for the six months to 31 December 2023, IG Group said total net revenue was 9.0% lower at £472.6m (€552.3m/$601.2m).

IG Group said that were declines within all business areas. Revenue from over-the-counter (OTC) derivatives fell 21.3% to £327.7m but remained by far its main source of revenue. Exchanged traded derivatives revenue fell 5.2% to £63.6m and stock trading and investment revenue 1.8% to £11.1m.

In terms of clients, total active users in H1 fell 5.0%, with declines across all core segments. First trade users also fell 10.0% year-on-year.

Net operating profit was higher than revenue at £462.9m. This was mainly due to £71.2m in interest on client funds. 

Cost-cutting actions yet to take effect

Looking at spending, despite IG Group taking action to lower costs, these efforts are yet to be felt. Operating costs were 7.6% higher at £299.9m.

There was better news in terms of spending related to finance. Costs for finance were up to £10.7m but this was more than offset by £26.1m in finance income.

As such, pre-tax profit in H1 amounted to £162.5m, but this was still down 32.2% from the previous year. IG Group paid £43.7m in income tax, leaving a net profit of £132.7m, a drop of 31.8%. The group did not publish EBITDA figures for the period.

“We remain confident and optimistic about the outlook for IG,” Rozes said. “We continue to be well positioned to benefit from the structural growth of self-directed trading and investing. 

“We’re the home of active traders worldwide, bringing exciting and innovative new products to market, backed by the best technology and trade execution.”

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