Exco, the moneybroking group, suffered a 21p fall in its share price to 120p after warning that full-year profits would be "markedly below market expectations." Last year's flotation price was 175p.
The company has been hit hard by falling foreign exchange volumes and has already cut 150 jobs this year. Carel Mosselmans, chairman, said Exco expected to report a fall in turnover in the full year similar to the 13 per cent decline reported for the six months to 30 June. He added that, since his cautious half-year report, volumes in wholesale financial markets had fallen further.
Exco has already taken restructuring action with the aim of cutting total operating costs by pounds 15m in a full year. It said it expected an exceptional cost of pounds 4m in the current year from the measures. It will maintain its final dividend of 6p, making a total of 9p for the year. This puts Exco on an historic price-earning ratio of 11 and a gross yield of 9 per cent.
Analysts downgraded their forecasts for full-year profits from pounds 27m-pounds 29m to pounds 16m-pounds 19m. Robert Mumby of BZW said: "It's a bit dire. The scale of the decline in revenues in the second half is pretty devastating. It has recovery potential next year."
Simon Whittock of Merrill Lynch said Exco was suffering from two things. "The foreign exchange industry is undergoing a structural change from voice-based traders [such as Exco] to screen-based ones like Reuters. Secondly, the banks are not letting their traders wheel and deal in the way they did in the past before the Barings disaster."
Peter Edge replaced Ron Sandler as Exco's chief executive in October 1994. Mr Sandler - now chief executive of Lloyd's of London - left with a pounds 297,000 pay-off three months after he floated the company out of administration. Exco had been part of the British & Commonwealth financial conglomerate that failed at the end of the 1980s.