IG Group Revenues Slump in Quiet Markets

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LONDON -- The U.K.'s leading spread-betting company, IG Group (LSE: IGG.L  ) , posted an 18% fall in first-quarter revenues as quieter financial markets took their toll. The company said: "The particularly quiet financial markets impacted all areas of client activity relative to the prior period, including active client numbers, average revenue per client and the number of clients signing up and trading for the first time."

The company said U.K. revenues were down 21% while revenues in Australia were 17% lower. It also reported a 20% drop in revenues in Europe, with clients reducing their activity during the summer holiday period. It reported an 11% fall in revenues in Japan and a 4% decline in revenues in the Rest of World.

IG Group explained: "The comparator period in 2011, which was 30% ahead of the year before, was marked by some extreme levels of volatility in financial markets and short term spikes in client activity. August 2011 remains, by some way, the record month for the group in terms of trading revenue."

IG Group reckons that the first quarter of any financial year is normally the lowest quarter. It also said the company continues to face tough comparatives at the start of the second quarter. That said, the company anticipates revenues will be weighted toward the second half.

A stronger second half could put the company on track for pre-tax profits of around 190 million pounds, which would value the business at a relatively undemanding 11 times profit based on this morning's 4% share price rise to 453 pence. Currently, IG Group is also penciled in for full-year dividend payout of 23 pence, which puts the shares on a prospective yield of around 5%.

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David Kuo does not own shares in IG Group. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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