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TP ICAP plunges as CEO quits amid warning that Brexit-related costs will see it missing 2018 profit expectations

The world's biggest interdealer broker said full-year earnings would be hurt by additional costs of about £10mln related to Britain's planned departure from the European Union

City Brexit
TP-ICAP said John Phizackerley would be replaced as CEO by Nicolas Breteau, who currently leads its global broking business

TP ICAP PLC (LON:TCAP) shares plunged over 30% on Tuesday as it said its chief executive officer John Phizackerley is quitting with immediate effect as the financial group warned that Brexit-related costs will see its 2018 underlying operating profit miss analysts' expectations.

The world's biggest interdealer broker said full-year earnings would be hurt by additional costs of about £10mln related to Britain's planned departure from the European Union and new rules on market transparency.

READ: Revenues edge higher in mixed trading at derivatives giant TP ICAP

It added that Phizackerley would be replaced by Nicolas Breteau, who currently leads TP ICAP's global broking business.

In addition, the firm added, Robin Stewart has been appointed as its chief financial officer on a permanent basis, having taken over following the departure of Andrew Baddeley last November.

The FTSE 250-listed also cut its cost-saving target to £75mln from £100mln annually by the end of 2019, blaming ongoing investment needs in "the light of the evolving industry landscape".

TP ICAP added that additional capital requirements and credit refinancing were likely to push up its finance costs to around £35mln this year.

EPS to miss forecasts

As a result, it added, 2018 earnings per share (EPS) are expected to be slightly below the bottom-end of the range of analyst expectations.

Analysts were expecting the firm to post underlying EPS of 37p for 2018, with a range of 34.9p to 39.0p, according to company-derived consensus estimates.

The company - which changed its name from Tullett Prebon after it bought London-based ICAP's voice broking business - also said 2019 would see £25mln in costs related to Brexit, regulation, legal needs, and IT security.

In early afternoon trading, TP-ICAP shares had dropped by 34.3% to 275.9p.

In a note to clients, analysts at Shore Capital said: “We will review our longstanding sell recommendation in the light of where the share price settles today but would expect our current 405p fair value to be revised to around 350p.”

 -- Updates share price, adds analyst comment --

Quick facts: TP-ICAP PLC

Price: 369.3 GBX

LSE:TCAP
Market: LSE
Market Cap: £2.08 billion
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