Tullett Prebon profits slide on investor fears

Michael Bow
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TULLETT Prebon reported a seven per cent slump in profits yesterday as it warned investors that trading activity would remain subdued for the rest of the year.

The inter-dealer broker, led by City veteran Terry Smith, saw underlying operating profit slip to £73.7m from £79.4m in 2011.

It led to a fall in basic earnings per share from 24.8p down to 16.8p.

Smith, chief executive of the firm, blamed the widespread malaise affecting investor sentiment and risk appetite.

“Market conditions are expected to continue to be challenging,” he said.

“The world’s financial markets remain unsettled, but market activity has been subdued in recent months and it seems reasonable to expect that it will remain so during the second half, particularly in comparison with some periods of more heightened activity during the second half last year.”

Revenues were flat at £455.1m compared to £454.8m last year.

However, Tullett Prebon’s broking business has been strengthened by January’s acquisition of New York based Chapdelaine & Co in America and last year’s purchase of inter-dealer broker Convenção in Sao Paulo, Brazil.

This helped prop up earnings by adding £17.3m to revenues.

Numis analyst James Hamilton said: “While the near term trading environment remains difficult with it unlikely to dramatically improve until there is the prospect of US interest rates increasing, investors are being paid to wait.”