UPDATE: IG Group Sees More Growth After Strong 2010

20th Jul 2010 08:39

(Adds executive and analyst comment.) By Margot Patrick Of DOW JONES NEWSWIRES LONDON (Dow Jones)--IG Group PLC (IGG.LN) Tuesday said its new fiscal year has started well, as May's market volatility continued into June and July. Reporting on its performance in the year ended May 31, IG Group said it made a GBP157.6 million pretax profit, adjusted to strip out GBP5 million in expenses for moving offices, up 25% from GBP125.9 million in fiscal 2009, and inline with its estimate last month of GBP157 million. Revenue was GBP298.6 million, up 16% from GBP257.1 million in fiscal 2009 and meeting its GBP298 million guidance. The June estimates had far outstripped analyst expectations, and in part were the result of brisk business in May, as markets went through a bout of extreme volatility from investor worries over the euro zone's fiscal health. IG Group shares opened down 1 pence at 466 pence. After opening offices in Sweden and Portugal and a representative office in China in the previous year, IG Group said it aims to move into at least one other country this year, while also seeing prospects for strong growth in its fledgling U.S. business. "We are well-placed competitively and have extended our market lead in several of our key markets over the last year. We have demonstrated continued growth from our U.K. business and strong growth from both Europe and Australia, which are now businesses of significant scale. I look forward to the coming year with confidence," Chief Executive Officer Tim Howkins said. He told Dow Jones Newswires the company was particularly pleased with a roughly 43% constant-currency growth rate in its Australian businesses, where it has been gaining market share from competitors and is benefiting from a broader increase in the number of people regularly taking bets on financial markets. Howkins said the next new office will be in either Canada or the Netherlands. IG Group is best known in the U.K. for its IG Index spread-betting operations that let people bet on stock, currency, commodity and interest rate moves. It also has major operations in Australia, Japan and continental Europe, offering contracts for differences and foreign exchange trading. The company benefits when volatility in financial markets is high, since it encourages more trading and use of its products. Analysts said current market conditions are ideal for the company, but that the rally in its stock price since the June trading update could lead to some profit-taking. "We expect strong growth to continue in the mid-term, particularly in Europe, where the offices are earlier on in their maturity profiles," analysts at UBS said, keeping a buy rating and 500-pence price target. Oriel Financials called the results "excellent" and raised its price target to 460 pence from 406 pence, while keeping a hold rating. By region, the U.K. contributed GBP168.5 million in revenue--including a GBP5.9 million contribution from its sports betting business--Australia GBP45.7 million, Japan GBP23.9 million and continental Europe GBP47.4 million. The rest of the world, including Singapore and the U.S., accounted for about GBP13 million in revenue. -By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; [email protected] (END) Dow Jones Newswires July 20, 2010 03:39 ET (07:39 GMT)