Strong growth delivered in first half, positive outlook for full year performance
Marex Group plc (‘Marex’ or the ‘Group’), the diversified global financial services platform, announces strong results for the six months to 30 June 2023 (the ‘period’). The Group has been transformed by ongoing investments in organic growth and selective acquisitions, enabling us to increase our market share and deliver very strong growth in revenue and profitability in the first half of the year. The increasing scale of the Group’s global and diversified franchise, post the ED&F Man Capital Markets acquisition which closed in the second half of 2022, has resulted in improved margins and materially higher ROE.
| H1 2023 | H1 2022 | Change | ||||
| Revenue ($m) | 1,191.3 | 670.3 | 78 % | |||
| Net Revenue ($m)1 | 618.9 | 332.9 | 86 % | |||
| Profit before tax ($m) | 120.2 | 55.4 | 117 % | |||
| Adjusted Operating PBT ($m)1 | 124.5 | 59.0 | 111 % | |||
| Adjusted Operating PBT margin1 | 20% | 18% | 200 bps | |||
| Return on Equity (ROE) | 28% | 18% | 1000 bps | |||
| Total Capital Ratio | 278% | 211% | 6700 bps | |||
| Full time employees (average number) | 1,831 | 1,145 | 60 % | |||
1 – Alternative Performance Measures, see pages 3 and 4 for reconciliations to reported results
H1 2023 Highlights
- Scalable platform delivering strong growth driven by increased client activity and benefit of higher interest rates, resulting in improved operating margins and returns
- Total trades executed up 166% to 59 million and contracts cleared up 203% to 312 million
- Total client assets up 48% to $11.8 billion at June 2023 from $8.0 billion at June 2022
- Prudent capital and liquidity management; continued growth in our capital base from strong profitability in the period, funding sources further diversified with successful €300 million inaugural senior debt issuance in January
- Recently acquired ED&F Man Capital Markets business performing strongly
- The integration continues to progress as planned, with key milestones around system integration delivered and clients benefiting from our expanded global footprint
- Further investment in Marex’s environmentals offering which generated strong revenue growth as clients look to Marex to help them navigate the energy transition
- Positive outlook for the Group, well positioned for future growth with an expanded global footprint, growing capital base and client-centric growth strategy
Ian Lowitt, Marex CEO, commented:
“We have delivered exceptionally strong performance in the first half of 2023, reflecting the strength and scalability of the diversified global platform we have built, which provides our growing client base with essential market connectivity and quality service. I am very proud of what the Marex team have delivered, both operationally and commercially so far this year. Our goal is to build a diversified global platform which allows us to do more business with each of our clients, and our improving margins and returns demonstrate the effectiveness of these platform economics.
The integration of ED&F Man Capital Markets, a strategically important acquisition, is progressing well. We have delivered several important integration milestones which will enable us to improve the efficiency of our operations as we continue to expand our global footprint. The business is delivering performance ahead of our expectations, and has transformed the scale and scope of the Group which will allow us to continue delivering on our track record of nine successive years of Operating PBT growth.
The outlook for Marex remains very positive. We are set to have another exceptional year in 2023. I am confident that we can continue to deliver sustainable growth and build an even more diversified, resilient and dynamic firm.”
CEO Review
Delivering exceptional performance
We have reported very strong revenue and profit growth driven by a successful combination of organic growth in the legacy Marex business and inorganic growth, following our acquisition of ED&F Man Capital Markets.
It is clear that the significant investments we have made in recent years have built a resilient and truly scalable platform. This is illustrated by our ability to process a significant increase in levels of client activity on the platform this year, with total trades executed up 166% period-on-period. We now have a truly global cross asset clearing offering and have continued to add important new client relationships, with the number of contracts cleared for clients up 203% in the first 6 months of 2023. We are now in the top 10 largest futures commission merchant (‘FCM’) by client assets in the US and enjoy top 10 market shares on many of the largest exchanges.
At the same time, we are building a track record of balancing investment for growth and maintaining a robust capital position whilst delivering improving margins and returns.
We have strengthened our executive management team to reflect the increased scale of our global franchise, with the addition of Rob Irvin, who joins us from HSBC as Chief Financial Officer and Graham Francis, who joins us from TP ICAP as Chief Operating Officer.
ED&F Man Capital Markets integration on-track
We completed the acquisition of the ED&F Man Capital Markets business across the UK, US, the Middle East and Australia in Q4 2022 and the integration is progressing well. We have welcomed over 400 former ED&F Man Capital Markets employees to the Group and I am pleased with how well they have embraced our culture, which emphasises agility, collaboration and client service.
We have delivered several key integration milestones, including the consolidation of office space in London and New York, and the integration of key trading and reporting systems. These actions will allow us to continue to improve our operating efficiency and we will continue to review our operations, such as rationalising our legal entity structure, to reduce complexity.
This is a very exciting time for Marex. I’d like to thank all our teams for their hard work and commitment to delivering on this integration whilst maintaining the high standards our clients expect.
Strategic Growth Initiatives
We maintained our focus on our strategic initiatives during the first half of the year, as we further expand our product offering and global footprint to diversify our business, underpinning our future growth.
The Group has further invested in its environmental products offering to support our clients in the transition to a lower carbon economy. We continued to see robust demand from our clients for this product offering, with revenue from our environmentals offering up 67% period-on-period in the first half of 2023 compared to 2022. We also announced in July that we had acquired Global Metals Network (‘GMN’), the recycled metals market maker based in Hong Kong. GMN serves high-quality clients predominantly based across Asia and brings further regional expertise and coverage to our existing offering in recycled metals.
We continue to see the benefits of our geographic expansion strategy. In the first half of the year, our enlarged US franchise delivered strong Net Revenue growth in both the legacy Marex business and from the ED&F Capital Markets acquisition, and contributed over 40% of Group Adjusted Operating PBT. Net Revenue was up 89% period-on-period in the APAC region, where we are excited to be expanding our clearing offering in the second half of the year to capture significant future growth opportunities we see there.
We are building out our coverage of the energy and financial securities markets in the Middle East. Whilst still a relatively modest part of the Group, our Net Revenue is growing each month and we now have over 40 employees in the region servicing our growing client base.
We also completed the acquisition of OTCex in the period. This bolt-on acquisition further expands our capabilities in the financial markets, increasing our distribution in equities and fixed income products, particularly in continental Europe and the Middle East. These operations are highly complementary to the ED&F Man Capital Market business and collectively give us a global reach as we look to establish our Clearing and Agency and Execution services to a growing client base in the financial markets.
Positive Outlook
The outlook for Marex remains very positive and we are set to have another strong year in 2023. We remain focused on our strategic growth initiatives and I am confident that we can continue to deliver sustainable growth and build an even more diversified, resilient and dynamic firm.
Looking ahead, the full year effect of recent acquisitions, combined with the normalisation of interest rates will support a materially higher level of revenue and profitability for the Group for the full year. This will enable us to continue to build our capital base to support future growth as well as delivering strong returns to our investors.
View the full interim results:
Marex Group Interim Results 2023