NYSE owner posts loss as costs mount
TRANSATLANTIC exchange operator NYSE Euronext yesterday reported a second-quarter net loss of $182m (£110m), largely due to one-time charges, but beat expectations.
The New York Stock Exchange parent recorded a $355m charge related to the termination of its European clearing contract with London-based LCH.Clearnet. It also absorbed a $87m charge from about 290 job cuts in Europe and the US, which were expected after the integration of several mergers.
But analysts applauded a surprising six per cent drop in fixed expenses and word from management that the company could exceed 2009 cost savings targets of up to $1.90bn, set only three months ago, thanks to aggressive cost cutting.
Average US equity trading volume jumped 25 per cent and European volume rose six per cent from a year ago, boosting cash trading revenue 20 per cent. Derivatives trading revenue, accounting for a quarter of overall revenue, slipped 10 per cent.
Excluding one-time items, the group earned 51 cents per share in the second quarter, topping analysts’ average forecast by six cents. Revenue rose 9.5 percent to $1.13bn.
“Solid expense control and continued synergy realisation drove this quarter’s upside; revenues were a bit light of our expectations,” Credit Suisse analyst Howard Chen said, noting a “backdrop of potential declines in industry-wide volumes and further competitive pressures”.
NYSE Euronext, which is led by chief executive Duncan Niederauer, has been under pressure from start-up trading venues.
The company also runs bourses in Paris, Amsterdam, Brussels, and Lisbon, as well as the London-based derivatives exchange Liffe, following its 2007 acquisition of Euronext.
The company launched its European Liffe Clearing platform yesterday, a venture it expects to boost earnings this year and yield more than $100m in annual revenue.