Nex ups cost-cutting plan amid falling profits

 
Oliver Gill
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Nex boss Michael Spencer (left) said he saw many opportunities ahead

Electronic broker Nex today deepened its cost-cutting exercise after announcing falling half-year profits.

The London-listed firm, the guts of broker Icap which sold its voice-broking business to Tullett Prebon at the end of last year, raised its target for annualised cost savings to £40m over the next three years, up from a £25m target announced in May.

Operating profit fell from £82m to £58m, with earnings per share almost halving to 8.9p.

The firm also revealed it has picked Amsterdam as the location of its new EU base as a contingency against the fall-out of a hard Brexit.

Chief executive Michael Spencer said Nex was focused on growing revenue and earnings.

Shares fell sharply when markets opened, before regaining ground. They are currently just over one per cent lower than Friday's closing price.

“Despite market conditions remaining challenging, we see many opportunities ahead. We have a diverse global business, an expanding client base and a robust balance sheet. This is a transitional and transformational year for Nex," he said.

Read more: Michael Spencer's Nex warns on profits at its Optimisation business

Amsterdam

Amsterdam was selected to operate Nex's fixed income and repo trading desks in the EU.

"[This] will allow us to continue to serve EU customers in the event of a hard Brexit," said Spencer.

Finance chief Samantha Wren said the decision followed an examination of issues such as employment laws, cost of employment, tax rates and regulatory regimes.

In October Nex issued a profit warning after announcing its optimisation arm will increase investment in sales activities and marketing campaigns in relation to the incoming Mifid II rules.

Shore Capital analyst Paul McGinnis said increased cost cuts were "somewhat counter-intuitive" given cost growth was higher than previously forecast.

Read more: The chief executive of Nex Group's Optimisation unit has resigned

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