London-headquartered Marex Spectron Group Ltd (Marex Spectron), which provides commodity brokerage services through its regulated businesses across the UK, US, Hong Kong, and Singapore, today reported a record operating profit of $22.7 million for its 2015 year that ended December 31st, according to a company statement.
2015 gross revenues amounted to $348 million, down $20 million from $368 million reported in 2014, but costs had been reduced by $29 million over the same period and helped lower operating expenses to $325 million from the prior year and helped lift operating profit to a record.
The cost reductions – which are part of a multi-year program to help reduce expenses – helped Marex Spectron realize the $23 million record operating profit, which jumped from $15 million year-over-year or higher by nearly $8 million amid the $20 million decline in gross revenues over the same period.
Although market conditions remain challenging, we are pleased with our start to the year.
Revenues down $20m profit up $8m
Overall, the cost rationalisation programme is described by the firm as having helped it improve operating profit by $32 million since 2013, with $42 million in cost reductions having offset $10 million in revenue decline that had been incurred in a related business that it had exited.
Shareholder’s equity also grew from $358 million in 2014, to $374 million reported for 2015, and higher by $16 million or 4.5% year-over-year. The company made changes to its pricing within its ProTrader specialist division while enhancing the product which provides technology and infrastructure services to traders.
Our focus is on winning market share through supporting clients with our intellectual capital, data, market-leading technology, and providing superior execution and advice.
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Marex Spectron CEO, Ian Lowitt, commented in the company’s statement regarding the results: “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.”
Mr. Lowitt added: “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.”
Eyeing more market share
Furthermore, the company hinted at plans to increase its market share, as Mr. Lowitt said in the statement: “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. Although market conditions remain challenging, we are pleased with our start to the year.”
Within the firm’s energy business, more than 1.1 million customer orders were executed for 1,429 clients across 639 products, and helped Marex Spectron maintain its revenues from the prior year despite currency headwinds that it noted in the report.
Investment into technology
Further investments were made into the firm’s proprietary algorithmic system, Nanolytics, which scans billions of data points that are available publicly aiming to filter out the effect of HFT traders in order to gauge supply/demand as a marker for potential future price trajectories, as noted in the results.
Marex Spectron said it was the number one liquidity provider (LP) on the London Metals Exchange (LME), after closing 2015 with 23% of ring volumes and 22% of electronic select volumes, according to the update for its 2015 results.
The firm’s agricultural (AG) business also grew its revenues and operating profit, and was described in the announcement as leading the field in options executions for soft commodities such as cocoa, coffee and sugar, and said its global market share was 25% for the reported period.