INTL FCStone registers 6% drop in net income in Q1 FY 2016

Provider of financial products, advisory and execution services INTL Fcstone Inc (NASDAQ:INTL) has earlier today posted its financial results for the three months to December 31, 2015, a period which marks the first quarter of the company’s fiscal year 2016.

The company registered decreases in net income and total revenues in the period, although operating revenues rose on the back of robust performance of the Securities an Global Payments segments.

Highlights for the quarter to December 31, 2015:

  • Total revenues amounted to $3.4 billion, down 75% from the result of $13.6 billion registered in the corresponding period a year earlier.
  • Operating revenues grew 10% year-on-year to $151.3 million and net operating revenues grew 10% year-on-year to $102.7 million.
  • Net income for the period was $8.8 million, down 6% year-on-year.
  • Diluted EPS were $0.46, down 6% from $0.49 in the same quarter a year earlier.

Sean M. O’Connor, CEO of INTL FCStone Inc., commented,

“We had strong operating results during the quarter in spite of the difficult macro environment, especially in commodities. Total segment income was up 26% with very strong gains from the Securities and Global Payments segments offsetting declines in our commodities-related segments. Similar to our fourth quarter 2015 results, marked-to-market fluctuations in our investments held in our interest rate management program had an effect on our bottom line results. While these investments are intended to be held to their maturity, they may result in short term fluctuations in our earnings. For the first quarter of 2016, the marked-to-market fluctuation resulted in $4.1 million after-tax loss while in the fourth quarter of 2015 they represented a $4.2 million after-tax gain.”

Let’s take a look at the results across segments:

  • Commercial Hedging

Operating revenues amounted to $55.4 million in the first quarter, down 19% from the result of $68.4 million registered in the equivalent period in the prior year. Exchange-traded revenues decreased 4% year-on-year, to $31.6 million in the first quarter, in the face of a 9% increase in exchange-traded customer volumes. This decrease mainly reflected a decline in the average rate per contract to $5.61, due to the decrease in business from introducing brokers in agricultural commodities as well as a narrowing of spreads in the LME metals business.

Segment income dropped 40% to $15 million in the first quarter, due to the decline in operating revenues as well as a $1.7 million increase in bad debt expense.

  • Global Payments

Operating revenues amounted to $18.3 million, up 20% from $15.2 million in the corresponding quarter a year earlier. This operating revenue growth was supported by a 39% rise in the volume of payments made.

Segment income rose 22% year-on-year to $10 million in the first quarter of FY 2016 compared to $8.2 million in the prior year. This increase was a result of the increase in operating revenues partially offset by a $0.4 million increase in non-variable expenses.

  • Securities

Operating revenues surged 184% to $48.8 million in the first quarter compared to $17.2 million in the equivalent period a year earlier. Segment income increased 1,188% to $21.9 million, primarily as a result of the strong performance in Equity market making and Debt Trading.

  • Physical Commodities

Operating revenues for Physical Commodities fell to $5.9 million in the first quarter compared to $6.5 million in the prior year. Segment income marked a drop of 60% to $1 million, compared to $2.5 million in the same period a year earlier. This primarily resulted from the decrease in operating revenues.

  • Clearing and Execution Services

Operating revenues were down 4% year-on-year to $29.8 million. Segment income staged a small decrease and amounted to $3.5 million, mainly as a result of the decrease in operating revenues and an increase in non-variable compensation and benefits.

You can view the full report by clicking here.

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