Icap has dropped more than 7% after warning that its profits would be at the bottom end of expectations.
The interdealer broker said after a challenging nine months to December, business had picked up in January and February, especially foreign exchange trading following changes in Japanese monetary policy.
Unfortunately for Icap, March did not see similar levels of business, and it now expects full year profits of £280m, the lower end of its previous guidance. Chief executive Michael Spencer said:
While we had a better start to the fourth quarter, we are not yet seeing a sustained upturn with market activity remaining fragile and unpredictable. This is caused in part by the continued lack of clarity around new regulatory requirements and the impact they may have.
The news has sent its shares down 23p to 299.6p. In a sell note Numis analyst James Hamilton said:
Despite the £60m of cost savings and the numerous downgrades yet again, Icap has disappointed reporting that March was a weak month with the better performance (against weak comps) in January and February not continuing into March. They expect profits to be about £280m, at the bottom of a regularly reduced forecast range and 7% below our much reduced £301.6m forecast. Even if this should be the bottom of the cycle - and many have tried to catch this falling knife - the libor related risks (these go well beyond a fine) remain.
[On libor] we cannot know if either Icap or any of its employees have done anything wrong but libor driven new regulation of the incould be negative for shareholders and until this is resolved we can see no reason to own the shares.
