Revenues at Intl FCStone 8.5% Lower QoQ, FX Volumes at Prime Brokerage Shed 38% QoQ

The company's FX prime brokerage has experienced a substantial decline in business in face of subdued market and low volatility.

intlfcstoneINTL FCStone Inc. (NASDAQ:INTL) has issued its results for the fiscal third quarter of 2014 findings on June 30th. The company has reported operating revenues at $ 118.2 million, dropping by 8.5% when compared to the previous quarter and 4% lower than a year ago. Net revenues have dropped to $76 million, which is down by 11.5% when compared to fiscal second quarter and 7% when compared to last year. Net income was reported at $3.5 million which is higher by 6% when compared to the same period of last year.

As for this quarter, the company’s Global Payments business, which was previously a component along with FX Prime Brokerage of the Foreign Exchange segment, has been broken out as the single component of a segment named Global Payments.

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The company’s Clearing and Execution Services (CES) segment, which provides clearing and execution of exchange-traded futures and options alongside the firm’s prime brokerage foreign exchange services, reported operating revenues dropping by 21% to $27.1 million in the third quarter compared to $34.1 million a year ago and lower by 12% when compared to the previous quarter.

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Revenues from the firm’s over-the-counter (OTC) component of its Commercial Hedging business have decreased 10% YoY to $22.8 million in the third quarter. The growth sectors in energy and renewables were offset by brisk declines in agricultural and foreign exchange hedging.

As a result from the 16% decrease in foreign exchange volumes driven by low market volatility, the firm’s operating revenues from the customer prime brokerage product line, reflected on the “trading gains net,” shed 54% to $2.9 million in the third quarter compared to $6.3 million in the fiscal third quarter of 2013.

The company’s CEO, Sean M. O’Connor, has stated: “Despite generally improving conditions over the last year or so, we did experience slightly more difficult markets and lower volatility during the current quarter. Customer activity was lower in the structured OTC and physical commodities markets and a lack of volatility drove a sharp decline in our Clearing and Execution Service segment. The exceptions to these declines were continued strong activity in LME metals, a recovery in our Securities segment and continued growth in Global Payments.”

Elaborating on the different segments of the company’s business he said: “On a year-to-date basis we recorded strong revenue growth in our Global Payments (31%) and Securities (20%) segments, offset by a sharp reduction in Physical Commodities segment revenues and a relatively small decline in Clearing and Execution Services.”

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