March 14, 2012 / 10:49 AM / in 6 years

UPDATE 2-GMP Capital profit down again, shares fall

* Q4 EPS C$0.02 vs C$0.50 last yr

* Q4 revenue falls 53 percent

* Stock sags 7 percent in Toronto

March 14 (Reuters) - GMP Capital profits were pummeled by weak capital markets for a third consecutive quarter in the final three months of 2011, the independent investment dealer said on Wednesday, sending its shares lower.

GMP, which was founded in 1995 and quickly became one of Canada’s most successful independent investment dealers, said net income in the fourth quarter, ended Dec. 31, was C$2.4 million ($2.42 million), or 2 Canadian cents a share.

“Our financial results in fourth quarter 2011 were adversely affected by the continued challenging market conditions which dominated much of the year,” Chief Executive Harris Fricker said in a statement.

In contrast, in the year-ago period the Toronto-based firm had earnings of C$46 million, or 50 Canadian cents a share, when capital markets revenue drove profits.

Shares in the company were down 7 percent at C$7.27 on the Toronto Stock Exchange near midday, or less than half their 52-week high of C$16.04.

GMP merged its wealth management division with Richardson Partners Financial in mid-2009, tripling its former operations and giving it the ammunition to become a major independent investment management firm in Canada.

The merger combined Richardson’s strong retail platform and GMP’s already strong investment banking operations, with the hope of boosting its ability to attract new talent in a tough recruiting environment.

After an auspicious start, however, GMP suffered as capital markets retreated in 2011 and it turned in three quarters of stunted profits, including a 79 percent fall in net income in the second quarter.

It posted a loss in the third quarter reversing from a profit a year earlier.

Fourth-quarter revenue fell 53 percent to C$72.7 million, as capital markets revenue nearly halved to C$67.1 million.

“We continue to believe our capital markets business offers the best foundation from which we can realize opportunities in the future,” Fricker assured analysts on a conference call on Wednesday.

“In 2011, we expanded our capital markets teams in each of the geographies we operate in, selectively adding top professionals across all product areas while expanding our international mandate to now include Australia.”

For all of 2011, GMP had a profit of C$29.1 million, slipping from C$31.2 million in the year-ago period.

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