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Jefferies Group posts lower Q2 profits, but revenues climb

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Jefferies Group Inc. (NYSE:JEF), a securities and investment banking firm, reported on Tuesday that higher compensation costs and one-time expenses impacted second quarter earnings, as the company failed to meet analyst estimates, sending shares down.

Shares fell 18 cents, or 0.85%, to $21.07 as of 11:07 a.m. EST.

In the three months ending May 31, the company’s bottom line dwindled to $81 million or 36 cents a share, versus $84 million, or 41 cents per share, a year earlier.

The firm attributes this to a $4.6 million charitable contribution for relief efforts in Japan, as well as $4.8 million in out-of-pocket costs that it incurred in May due to the acquisition of Prudential Bache, which is expected to close by July 1.

In April, the investment banking firm announced it agreed to purchase Prudential Financial Inc.’s commodities trading and derivatives business for $430 million.

Excluding special items, profits for the latest quarter totaled $87 million, or 39 cents per share.

The New York-based firm posted a 9% increase in net revenues of $727 million, compared to $668 million in the year ago period. Revenue from its investment banking unit ascended 28% to $328 million, up from $256 million in the prior year.

Results, however, failed to beat analysts' forecasts of 40 cents a share in earnings on $727 million in sales.

"We are pleased with these results, which reflect the durability of our sales and trading platform, despite the challenging market environment that persisted throughout the quarter," said chairman and CEO of Jefferies, Richard B. Handler.

"While we have much more work to do, we are pleased with our team, strategic position, and diversified business mix," he added.

Compensation and benefit costs edged up 12% to $431.9 million during the second quarter. The company hired 140 people, bringing its total staff to 3,222, according to its statement.

Quick facts: Jefferies Group

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Price: 37.29 USD

Market Cap: $9.21 billion

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