The comments came as management defended the company's worst-ever quarterly performance. On Wednesday it reported a net loss due to higher costs and falling commodity revenue.
The company's share price on Nasdaq was down some 15 percent at $22.54 in afternoon trading.
FCStone has increased its customer base following a bulk transfer of MF Global accounts and the opportunistic purchase of its rival's UK metals trading operation.
But those investments are not yet paying off because trading activity remains low, said Sean O'Connor, chief executive officer of the futures commission merchant and physical commodities trading company, in a conference call.
Investor confidence remains battered after the shock collapse of MF Global at the end of October, which revealed that customer funds held in segregated accounts at one of the largest commodities brokers were missing.
It's tough, he said. We're not happy with our performance. We've taken some transformatory steps at an attractive cost. Down the road, they will pay off, he said.
The broker, created through the 2009 merger between International Assets Holding Corp and FCStone Group, has grown aggressively through a series of large acquisitions in recent years. Its first fiscal quarter was particularly busy in that sense.
The company gained 3,000 customer accounts and 800 new commercial corporate clients from MF, as well as its UK metals team.
But investor confidence has not yet recovered.
Our embedded customer (base is) bigger, but they're not doing as much as before, so it's not very helpful now, said Chief Financial Officer Bill Dunaway.
Costs associated with new customers and the new UK metals team and integrating the team with UK-based broker Ambrian Commodities also ate into the bottom line.
O'Connor hopes the new customers and the enlarged British metals businesses will have a positive impact by the end of the fiscal year at September 30.
In the long term, we need some help from the market, but by the fiscal year-end, we should hit our targets, said O'Connor.
A pick-up in trading activity, key for earning revenue from commissions, would provide a boost.
As liquidity comes back, we'll see that (increased customer base) reflected in revenue and profitability, said Dunaway.
LME TEAM STANDS OUT
The new LME ringdealing team, acquired at a very nominal price in November, has performed phenomenally well already, winning back former clients, O'Connor said.
They are pretty much back on track to pre-MF Global bankruptcy (levels), he said.
Buying MF Global's UK trading team and its LME ringdealing seat gave the broker the rare opportunity to pick up an existing LME business in a single deal.
That deal was typical of FCStone's strategy of bringing on board a team of traders and brokers, O'Connor said, noting that it may take longer to see the benefits, but it costs less than buying a going concern.
In a similar vein, it will take six to nine months to rebuild the revenue from the 800 former MF Global corporate commercial clients it has gained, management said.
The company believes there are still more former MF Global clients to be won, too.
We're getting calls from MF Global customers. We've become an attractive alternative to people, said Dunaway, noting the few competitors in its space.
HIGHER COSTS, LOWER COMMODITY REVENUE
Results for the first quarter ended December 31 revealed escalating costs, which management said it aims to rein in, and falling commodity revenue.
The average number of employees increased 28 percent to 963 from the first quarter last year, while average revenue per employee dropped by a third to under $390,000 (246,554.56 pound), well below the company's internal target of more than $500,000.
Reflecting the costs of taking on more staff, including the 50 MF Global members and UK-based Ambrian Commodities, compensation expenses accounted for almost half of total adjusted revenue. The company's target is to reduce that below 40 percent.
After the market close on Wednesday, FCStone reported a first-quarter net loss of 2 cents per share, compared with a profit of 22 cents per share a year earlier, as expenses rose and revenue from commodities operations fell.
Comparisons with the year-earlier period are all the more stark because the first quarter of fiscal 2011 was the company's best on record, management noted.
(Reporting By Josephine Mason; Editing by Gerald E. McCormick)