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TMX Group Profit Matches Estimates as Financings Drop

May 10 (Bloomberg) -- TMX Group Ltd., owner of the Toronto Stock Exchange, said first-quarter profit matched estimates as trading volume dropped and fewer companies sought financings.

TMX’s net income was C$37.8 million ($37.5 million), or 70 cents a share, the Toronto-based company said today in a statement. Revenue was C$172.2 million. The numbers from a year earlier aren’t strictly comparable because a new company was formed by the sale of the exchange owner to a group of banks and pension funds.

TMX said it had profit of 78 cents a share excluding some items, matching the average estimate of nine analysts surveyed by Bloomberg. Revenue missed estimates.

TMX fell 1.8 percent to C$52 at 9:35 a.m. in Toronto. The stock has gained 2.5 percent this year.

“Macroeconomic conditions continue to affect TMX Group’s operational and financial performance,” Thomas Kloet, chief executive officer with TMX, said in a conference call today. “The cyclical slowdown in commodities means economies like Canada’s will suffer somewhat. The most pronounced effect of these macroeconomic factors has been on our equities listings and trading business.”

Trading on TMX’s equity markets, including the Toronto Stock Exchange, TSX Venture and Alpha, fell 22 percent to about 38.5 billion shares in the quarter from a year earlier, according to company statistics. Financings on the Toronto Stock Exchange and TSX Venture fell 42 percent to C$9.84 billion, the company said.

‘Big Pause’

“When you’re in Canada, you live and die by resources,” Arthur Salzer, chief executive officer with Northland Wealth Management, said on the phone from Toronto on May 7. His firm manages C$225 million. Salzer doesn’t own shares of TMX and is not interested in buying the stock due to weakness in the Canadian equity market.

“We had 10 very nice years of resources doing quite well, climbing higher and trading more. There is now a very big pause in the resource cycle we will have to live through,” Salzer said.

TMX announced a deal with FTSE Group to combine their fixed-income index businesses into a joint venture, the FTSE TMX Global Debt Capital Markets, on Feb. 27. TMX owns a 25 percent stake in the business.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

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