Marex Spectron posts record $22.7m operating profit for 2015

Marex Spectron, the London based globally regulated commodities broker, has posted a record Operating Profit of $23 million for the year ended 31 December 2015, up from $15 million in 2014. EBITDA increased to $31 million from $25 million in 2014.

Gross revenues were $348 million, compared with $368 million in 2014.  However, costs were reduced by $29 million to $325 million from $354 million in 2014.  Shareholders’ equity grew to $374 million, up from $358 million in 2014.

Highlights for the year included:

Further strengthening of the firm’s financial position, having successfully implemented a multi-year cost rationalisation programme focused on underperforming businesses, desks and offices. These actions have improved operating profit by $32 million since 2013, with cost reduction of $42 million offsetting $10 million of revenue decline associated with the exited businesses.

In what was a challenging environment for commodity broking, Marex Spectron continued to enhance its market leading position:

  • In Energy, the firm maintained revenues year-on-year (despite currency headwinds) and increased operating profit, with many of its desks enjoying a record year. In 2015 the firm executed over 1.1 million customer orders for 1,429 clients in 638 products. Market share across the energy business ranged from high teens to low thirties on the more mature desks.
  • In Metals, Marex Spectron strengthened its position as the number one ranked liquidity provider on the LME.  The firm closed the year with around 23% of the Ring volumes and 22% of the electronic Select volumes.
  • In Agriculturals, the firm further grew revenues and operating profit. It is the number one executor of options in soft commodities (cocoa, coffee and sugar) with a global share of around 25%.

– ProTrader, a specialist division that provides independent traders with technology and infrastructure services, rationalised its cost and pricing structure, as well as adding to its product offering and attracting new clients.

– Financial Futures and Options business performed credibly in very challenging markets.

– Specialist Metals functionality has been integrated into Neon, Marex Spectron’s industry leading Direct Market Access (DMA) technology platform, a development that has increased its attractiveness to clearing clients. Neon now has almost 300 users placing orders directly into the market, with a further 900 users at 240 separate clients directing their exchange traded electronic order flow via the firm using third party vendor-provided platforms.

– There was continued investment in Nanolytics, a proprietary algorithmic system that assesses several billion publically available data points each day. Nanolytics analyses contracts in 39 different commodity markets, separating out the effect of HFT trades, to determine the underlying supply and demand balances, which is a valuable guide to future price movements.

– Marex Spectron has continued to develop its global franchise. In the US, a multi-year program has been underway, raising the level of profitability through increased team productivity and cost discipline. Hong Kong continues to perform well and Singapore is now profitable.

– Liquidity and capital strengthened in 2015, with a year-end regulatory capital surplus of $113 million versus $76 million in 2014.

Ian Lowitt, Chief Executive Officer of Marex Spectron commented: “To produce record profits in a particularly challenging year for commodities is an exceptional result. This is largely due to the successful streamlining of the business over the past three years, having exited unprofitable activities and improving our core businesses, and in doing so we have solidified and advanced our market position globally. Our ability to support clients across such a broad range of products, from Energy, Metals, and Agriculturals – the core of our business – to Financial Futures and Options, and market access through ProTrader, makes us distinctive and has given us strong foundations for further growth.

“We are planning exciting new investments. Our intention is to expand in the areas where we enjoy competitive advantage and we see significant opportunities as banks and other participants retreat from the commodity space.  Our focus is on winning market share through supporting clients with our intellectual capital, data, market-leading technology, and providing superior execution and advice.

As for 2016, Mr. Lowitt stated: “Although market conditions remain challenging, we are pleased with our start to the year.”

Marex Spectron is a leading commodities brokerage headquartered in London but with an international network covering Asia and North America, with significant market shares in many major Agricultural, Metal and Energy products.

The brokerage is regulated in the UK by the FCA, in the US by the NFA and CFTC, in Hong Kong by the SFC, and in Singapore by the MAS.

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