Canaccord Financial Cuts Dividend by 50% as It Swings to Loss

Canaccord Financial Inc., Canada’s largest non-bank-owned brokerage firm, cut its dividend by 50 percent to 5 cents a share after reporting a loss in the first quarter that missed analysts’ estimates.

The Vancouver-based firm also announced job cuts of about 60 positions in addition to a previously announced 16 as market activity, including mergers and public offerings, cooled.

The company reported a loss of C$20.6 million compared with income of C$13.2 million in the same period a year ago. Its loss per share was 24 cents compared with earnings of 16 cents last year. Its adjusted loss was 20 cents compared with an average estimate of a 4-cent loss of four analysts surveyed by Bloomberg. Revenue rose 1.7 percent to C$162.5 million.

“Our operating environment continues to be characterized by adverse market conditions -- particularly in the small-to-mid-market resource space -- a traditional strength for our company,” Chief Executive Officer Paul Reynolds said in a statement. “The results were apparent in several revenue lines during our fiscal first quarter.”

Sumit Malhotra, banking analyst at Macquarie Capital Markets in Toronto, forecast that a dividend cut was “likely on the table” in an Aug. 1 note as Canadian independent brokerage firms slow “significantly” from a trading and underwriting perspective.

The company, which relies on trading and fees from mergers and stock sales for more than half of its revenue, faces a slowdown in Canadian equity financings, which have dropped to the lowest level in two years. It had previously announced 16 job cuts in Montreal.

“We’re actively engaged in additional cost-reduction initiatives aimed at enhancing the efficiency of our operations during this period of market instability,” Reynolds said in the company’s statement.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE