- Company to cut 17% of workforce
- Plans expected to save 18% costs against consensus
- Full year earnings reiterated
Shares in global trading platform provider CMC Markets (CMCX) leapt 16% to 155p after cutting its workforce by 17% as part of a drive to reduce costs and increase efficiencies.
Monday’s rally takes the shares up almost 40% over the last month and follows 21% gain on 8 January when the company raised its full year operating profit forecast to between £290 million and £310 million from £250 million to £280 million.
At the half year update (16 Nov) management told investors the company was reaching the peak of its investment cycle and would review the cost structure.
WHAT DID THE COMPANY SAY?
The company plans to lay-off 200 people across the group which will incur a one-off cost of circa £2.5 million in the 2024 financial year to the end of March.
Management estimates the cuts will save an annualised £21 million to be realised in 2025 which represents an 18% reduction against consensus analyst forecasts for group staff costs.
Cost reductions have been achieved by merging support functions, streamlining reporting lines and automating processors. While continuing to find further efficiency opportunities the company emphasizes it remains committed to investing in growth opportunities.
The firm said current trading is in line with expectations and it is on track to deliver the upgraded full year operating income of between £290 million and £310 million.
LIGHT AT THE END OF THE TUNNEL?
It is noteworthy the shares have lost around 38% of their value over the last year despite recent strong gains. The fall coincides with analysts revising down their 2024/25 earnings estimates by more than 50%.
Since troughing in January consensus earnings estimates have jumped by more than 20% suggesting the company’s fortunes may have made a turn for the better.
Financials analyst Vivek Raja at Shore Capital upgraded his recommendation from sell to hold following the positive trading statement in January.
Raja said: ‘Forecast momentum has been very erratic on CMC over the past few months, the magnitude of revisions emphasising the significant effect of operating leverage and how quickly fortunes can turn in this sort of business.
