IG Group, listed on the London Stock Exchange (LON: IGG), plans to cut around 300 jobs by the end of fiscal year 2023. This move, representing about a 10% reduction in the total workforce, follows the company’s investigation into areas for cost efficiency.
IG’s Significant Cost-Reduction Strategy
The brokerage group announced on Tuesday a significant cost-saving initiative with an expected total run-rate saving of £50 million annually. The projected structural savings stand at £10 million in FY24, escalating to £40 million in FY25 and reaching £50 million by FY26.
On top of this, IG foresees an additional savings of £10 million in FY24 due to reduced variable costs. These savings come in response to the less favorable market conditions reported in Q1 and extending into Q2, resulting in £20 million in total annual savings.
During the first quarter of the current fiscal year, IG, headquartered in London, reported a total revenue of £242.9 million. Despite a surge in revenue from derivatives, stocks, and other investment products, a dip was seen in its interest income.
IG’s decision to cut costs came as its shares were falling in the stock market. The group’s stock closed at £6.16 on Monday, representing a drop of 21.38% in value this year alone. Compared with its performance over the last five years, the returns have remained stagnant.
The IG stock peaked at £9.5 in April 2021, driven by the COVID-19-triggered volatility in the global stock markets.
IG Group’s Lean Business Model
The group aims to simplify and streamline operations through these cost cuts, setting the stage for future growth, according to its official press release.
Charlie Rozes, acting CEO of IG, stated that they were working to position IG Group as a lean fintech company. Rozes emphasized that they took these decisive steps to build a robust platform for future growth. He also mentioned their commitment to continually explore cost-efficiency opportunities to create a more agile and scalable organization. Rozes assured full support to their employees during this transition, recognizing the challenging nature of these decisions but emphasizing their importance for the group’s long-term success.