- Toronto-based brokerage says it's cutting 7% of workforce
- Canaccord suspends dividend until `profitablity returns'
Canaccord Genuity Group Inc., Canada’s largest non-bank brokerage, fell the most in the Standard & Poor’s/TSX Composite Index after posting its biggest loss as a public company and suspending its quarterly dividend.
Canccord tumbled 6.6 percent to C$3.52 at 9:31 a.m. in Toronto, the lowest in almost seven years. The stock has declined for five straight days and is down 31 percent this year, compared with the 5.6 percent slide in the benchmark index.
The brokerage on Thursday said it’s cutting 125 jobs, or 7 percent of its workforce, after announcing a third-quarter loss hampered by a C$321 million ($230 million) impairment charge on its capital markets business. The Toronto-based firm, which went public in 2004, said in a statement it was suspending its 5-cent-a-share dividend until “profitability returns.”
"It was Churchill who opined that you should never let a good crisis go to waste, and in that spirit the new management team at Canaccord Genuity has cleared the decks in the fiscal third-quarter results," Sumit Malhotra, a Scotia Capital analyst, wrote in a note to investors.
The net loss in the period ended Dec. 31 widened to C$346.4 million, or C$3.91 a share, from C$21.5 million, or 27 cents, a year earlier, the company said in the statement. Canaccord recorded $4.3 million in costs tied to job cuts in Canada, the U.K. and U.S. and closing its Barbados office and said it expects an additional C$14 million in restructuring costs in the fourth quarter.
Chief Executive Officer Dan Daviau, who took over the top job in October, on Friday reiterated his push for cutting costs and repositioning the firm amid a global slump in commodities and equities. Daviau earlier pared jobs in sales, trading and research amid a U.S. reorganization, realigned the Canadian capital-markets business and parted ways with longtime executives. The firm had 1,858 employees at the end of December, down from 1,887 at the end of September and 2,002 a year earlier.
“We would have made these cuts regardless of the market environment today," Daviau said Friday on a call with analysts. “It’s just simply how we’re going to be doing business going forward, and there’s a strong culture on costs that may have not existed in this organization to the same degree in the past."