BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, fell after it reported fourth-quarter profit that trailed estimates as expenses increased and trading volumes declined.
Shares declined 2.2 percent to 12.04 reais at the close of trading in Sao Paulo, the second-worst performance on the MSCI Brazil/Financials index, which slid 0.8 percent. The benchmark Bovespa index gained 0.5 percent.
Net income fell 27 percent to 191 million reais ($110.5 million) in the fourth quarter, from 261.5 million reais a year earlier, Sao Paulo-based BM&FBovespa said in a filing late yesterday. Adjusted net income, which excludes extraordinary events, was 352.7 million reais, below the average estimate of 377.3 million reais from nine analysts surveyed by Bloomberg.
The exchange’s expenses increased 55 percent to 291.6 million reais. Revenue was 471.2 million reais in the fourth quarter, compared with 473.3 million reais a year before.
“Expenses were the main source of disappointment,” Banco BTG Pactual SA’s analysts Marcelo Henriques and Eduardo Rosman wrote in a note. “The company was doing such a great job in previous quarters that we weren’t counting on this miss.”
Bovespa’s average daily trading volume fell 5.5 percent in the quarter, while BM&F’s average daily contract value fell 6.1 percent, according to the statement.
Adjusted earnings per share were 18.3 centavos, from 18.5 centavos in the last three months of 2010.
“2011 was a tough year,” Chief Financial Officer Eduardo Refinetti Guardia said in a meeting with analysts today in Sao Paulo. “But we managed to keep our earnings per share close to what it was in the previous year, showing we were able to manage our expenses in a way that allowed us to achieve a good result.”
High-frequency trading accounted for 10 percent of equity volume in the fourth quarter, up from 4.3 percent a year before. Such trading should continue to increase, which may reduce the exchange’s profit margin as fees charged for those transactions are lower than the average, Guardia said.