GMP Capital halves payout, profit sinks

GMP Capital Inc. (GMP-T) reported an unexpected quarterly loss on Friday on a sharp fall in investment banking revenue and cut its quarterly dividend by half, sending its shares down by as much as 14 percent.

The Toronto-based company, whose stock has lost nearly two-thirds of its value over the past year, suffered a 43-percent decline in revenue in the first quarter due to weakness in its core resource-focused investment banking business.

"Adverse market conditions continue to affect the level of business activity, particularly in the Canadian mid-market resources sector," GMP chief executive Harris Fricker said in a statement.

Volatile equity markets and a challenging credit environment have hurt underwriting and new issues in the resource sector over the past year, particularly the small- to mid-cap mining sector, where GMP has been strong.

The Toronto Stock Exchange and the small-cap TSX Venture Exchange are home to more than half of the world's publicly traded mining companies, the bulk of them junior explorers and developers.

GMP halved its dividend to 5 cents a share, citing the need to conserve capital in a difficult market.

The news sent the company's shares down as much as 14 percent to their lowest level since March 2009.

WEAK MARKETS

GMP reported a net loss attributable to shareholders of $2.3 million, or 4 cents a share, for the quarter, compared with a year-earlier profit of $22.5 million, or 29 cents a share.

Its adjusted loss was 2 cents a share, well shy of analysts' expectations of a profit of 16 cents a share, as compiled by Thomson Reuters I/B/E/S.

Capital markets revenue declined 43 percent to $58.9 million on investment banking weakness and on lower commission revenues.

Overall revenue, which include GMP's smaller wealth management and alternative investment businesses, fell to $66.1 million from $115.3 million in the year-before quarter.

The company also took a $4.5 million restructuring charge related to management changes.

Despite the weak performance, Fricker said the company is planning for better times lie ahead.

"We continue to aggressively seek opportunities to add to our global talent pool and position the firm for robust performance in more normalized market conditions," he said.