Ed Broking boosts parent BGC’s 2019 revenues but profits dip

Global brokerage and financial technology company BGC Partners, which acquired Ed Broking in February 2019, posted solid revenue growth last year, partly thanks to the addition of Ed, but its profits decreased for the whole of 2019.

BGC’s consolidated results for the year ended December 31, 2019 show an 8.6 percent increase rise in revenues but a 23 percent decrease in income.

The results reflect the continuing operations of BGC and exclude the results of its former subsidiary Newmark Group, as all the shares of Newmark held by the company were spun-off to stockholders of BGC on November 30, 2018.

Revenues for 2019 were $2.1 billion as compared to $1.9 billion in 2018, while pre-tax income was $138 million as compared with $180 million in 2018.

Howard Lutnick, chairman and chief executive officer of BGC, said: “We generated top-line growth despite generally lower industry volumes. I am pleased to announce that our board declared a 14 cent qualified dividend for the fourth quarter. At yesterday’s closing stock price, this translates into a 9.4 percent annualised yield.

“Before our first quarter conference call, we expect to submit a proposal to BGC’s Board of Directors and relevant committees with respect to converting our partnership into a corporation. Our current target is to be positioned to begin executing a conversion around the end of the third quarter of 2020, and expect to complete the execution around year end. Any such restructuring would be subject to tax, accounting, regulatory, and other considerations and approvals.”

Shaun Lynn, president of BGC, added: “Our energy and commodities business improved by 26 percent for the full year 2019, led by the acquisitions of Poten and Ginga Petroleum, partially offset by the sale of CSC Commodities. Revenues from equities, insurance, and other asset classes increased 14 percent in 2019 due mainly to the acquisition of Ed Broking.

“We believe our insurance brokerage business is worth materially more than our investment and are actively considering ways to better express its value for the benefit of our investors. Our Fenics fully electronic rates business increased 14 percent while data, software, and post-trade grew by 12 percent in 2019. The 2019 net investment cost associated with our newer standalone Fenics businesses was more than $55 million, and we expect these businesses to break even in 2021.

“As our stand-alone Fenics offerings continue to gain traction, we convert voice and hybrid revenue to higher margin fully electronic trading, and as our recently added brokers and salespeople ramp up production, we expect the company’s revenues and profits to grow.”

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