Tags: Nomura | losses | costs | NMR

Nomura Posts Losses, Cutting Costs

By    |   Monday, 28 Nov 2011 02:10 PM

Japanese securities and investments firm Nomura Holdings (NMR) posted large losses in 2009 and then ran a string of 10 profitable quarters. For the start of the company's 2012 fiscal year, Nomura again posted losses and is looking to at a round of cutting costs to get back to profitability.

Nomura Holdings is Japan's largest brokerage firm. It divides its business into the segments of retail securities sales, asset management and wholesale. The wholesale division handles investment banking functions and stock and bond trading for institutional customers. The company has operations in Europe and North America as well as Japan. Nomura shares trade in the U.S. as American Depositary Receipts, with each ADR share backed by one Japanese share.

At the end of September 2011, Nomura completed the first half of the company's 2012 fiscal year. For the quarter the company reported total revenues down 9 percent year-over-year and down 9 percent quarter-over-quarter.

The drop in revenues resulted in a loss of $600 million compared to a gain of $220 million in the fiscal first quarter. Dollar results are based on the yen exchange rate in effect at the end of the respective quarter.

Wholesale drop

The wholesale division of Nomura Holdings is the culprit for the swing to net losses. The revenues for the division dropped 40 percent from the first quarter and were 50 percent below the same quarter a year earlier. The management notes in the earnings report blame the downturn on the financial turmoil in Europe during the quarter.

In response, Nomura management announced a plan to cut $1.2 billion worth of expenses out of overhead and to reposition some assets and operations out of Europe to the Americas and Japan. After earning 23 cents per ADR share in FY 2010, the company earned 10 cents per share in 2011 and is forecast to earn just 5 cents in 2012.

Masao Muraki at Deutsche Bank believes the share price drop after the loss was announced pushed the Nomura shares to oversold and that the price could rebound. David Marshall, an analyst at CreditSights in Singapore, has questioned whether the company can generate profits from its international business.

The company next reports on Jan. 31.

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Japanese securities and investments firm Nomura Holdings (NMR) posted large losses in 2009 and then ran a string of 10 profitable quarters. For the start of the company's 2012 fiscal year, Nomura again posted losses and is looking to at a round of cutting costs to get back...
Nomura,losses,costs,NMR
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2011-10-28
Monday, 28 Nov 2011 02:10 PM
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