NYSE Euronext (NYX) on Friday reported a decline in fourth-quarter profit hurt by expenses related to the termination of its proposed merger with Deutsche Boerse AG (DBOEF.PK,DBOEY.PK). Adjusted earnings topped Street projections as higher technology services revenues offset poor performance in derivatives.
NYSE Euronext Group Executive Vice President and CFO Michael Geltzeiler said, "Despite challenging market conditions, our fourth quarter results were solid with an increasing contribution from non-trading revenue sources and continued cost discipline driving a 13 percent increase in operating income."
Fourth-quarter profit attributable to NYSE Euronext was down at $110 million or $0.43 per share compared to $135 million or $0.51 per share a year ago.
The latest quarterly results included $46 million of pre-tax merger expenses and exit costs mainly related to the proposed merger with Deutsche Boerse AG as well as charge of $25 million related to the settlement of a tax matter with French authorities related to BlueNext, a joint venture with Caisse des Depots.
Adjusted net income grew 8 percent to $130 million or $0.50 per share from $120 million or $0.46 per share last year. On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share. Analysts' estimates typically exclude special items.
Total revenues for the quarter increased to $1.054 billion from prior year's $1.045 billion. Total revenues, less transaction-based expenses, grew 2 percent to $628 million primarily driven by higher technology services revenues, while analysts were looking for $626.56 million.
Segment-wise, derivatives revenue edged down 1 percent as slightly lower European derivatives trading volumes were partially offset by higher average net revenue per contract. Cash Trading and Listings net revenue increased 2 percent on higher listings fees and other revenue and information services and technology solutions revenue grew 11 percent driven by higher connectivity software sales.
For the full-year 2011, adjusted net income climbed 19 percent to $653 million or $2.48 per share and revenues increased 3 percent to $4.55 billion.
Further, the Board of Directors declared a cash dividend of $0.30 per share for the first quarter of 2012, payable on March 30 to shareholders of record on March 15.
On February 2, NYSE Euronext officially agreed with Deutsche Boerse to terminate their proposed merger, which was agreed upon in February last year, after the European Commission decided to prohibit the move, citing that it would significantly impede effective competition.
NYSE Euronext CEO Duncan Niederauer now said, "We are extremely disappointed with the decision, and as I have stated, we believe that it stems from a fundamentally different view of the competitive dynamics in the global markets."
The company also resumed its previously announced stock repurchase program of $550 million remaining in authorization.
Looking ahead, the company said its progress in the past year has well-positioned it for 2012 and beyond.
"We are targeting a two-year plan that, with only modest improvement in the operating environment, will drive higher levels of earnings per share growth through a combination of targeted revenue growth initiatives, accelerated cost efficiency efforts and disciplined deployment of capital," the company said.
NYX shares closed Thursday's trading at $27.69, down $0.35 or 1.25 percent.
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