Jefferies Group Swings to Loss
March 15 2016 - 8:10AM
Dow Jones News
Jefferies Group LLC swung to a loss during its first quarter, as
trading revenue tumbled due in part to choppy markets and concerns
over economic growth.
The firm, a unit of Leucadia National Corp., reported a net loss
of $166.8 million during its fiscal first quarter, compared with a
profit of $12.9 million a year earlier. Revenue fell 49%, to $299
million.
"Our overall first-quarter results reflect an exceptionally
volatile and turbulent market environment during our first fiscal
quarter, although our core businesses performed reasonably,
considering the environment," Rich Handler, chairman and chief
executive, and Brian Friedman, chairman of Jefferies's executive
committee, wrote in a statement. "A quiet December was followed by
an extremely challenging January and first few weeks of
February."
The first quarter extended a brutal stretch for the firm, whose
debt-trading revenue plunged by 65% last fiscal year. Jefferies
responded by shrinking its balance sheet. That continued during the
first months of the new fiscal year.
"As we have done through many other turbulent periods in our
history, we reduced our already smaller balance sheet to continue
to reduce risk during this difficult period," the executives said.
"We are humbled by Jefferies' quarterly loss and will strive to
deliver the better results that our shareholders deserve."
In the first quarter, trading revenue plunged 82% to $58.8
million. Fixed-income revenue fell to $56.8 million from $126
million. Stock trading dropped to just $1.7 million, from $203.5
million, largely on the markdowns of two equity block trades.
Last week Citigroup Chief Financial Officer John Gerspach dealt
another blow to investors hoping for a rebound in trading revenue
at major Wall Street banks. He said revenue from equities and
fixed-income trading likely fell 15% in the first quarter.
In the fourth quarter, banks from J.P. Morgan Chase & Co. to
Morgan Stanley posted weak trading results, with the latter cutting
25% of its fixed-income trading jobs.
In Jefferies' statement, the executives said "it appears markets
have not only stabilized, but aggressively snapped back" in the
early days of the second quarter, beginning in March.
Austen Hufford contributed to this article.
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
March 15, 2016 07:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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