TMX Group Fourth-Quarter Profit Beats Estimates on Takeovers

TMX Group Ltd., the owner of the Toronto Stock Exchange, said fourth-quarter profit was C$32.8 million ($32.9 million), beating analysts’ estimates, on higher revenue from acquisitions.

TMX had net income of 61 cents a share, the Toronto-based company said today in a statement. Revenue rose 12 percent to C$181.1 million. The numbers from a year ago 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 last year.

The company benefited from an increase in revenue from its trading, clearing and depository business, after adding contributions from the Canadian Depository for Securities Ltd. clearinghouse and Alpha Group. The businesses were acquired as part of TMX’s C$3.73 billion takeover in September.

“Today’s TMX Group is an even more diversified company that it was a year ago with the addition of CDS and Alpha,” Chief Executive Officer Thomas Kloet said today on a conference call with investors. “We have an even broader range of opportunities for future growth.”

TMX said it had profit of 95 cents a share excluding some items, beating the 73 cents a share average estimate of eight analysts surveyed by Bloomberg. TMX said it had C$13.1 million of costs tied to its takeover.

TMX rose 2.3 percent to C$56.73 at 4 p.m. in Toronto. The stock has gained 12 percent this year, more than four times the increase for the Standard & Poor’s/TSX Composite Index.

Operating Income

Income from operations fell 6.5 percent to C$75.8 million from C$81.1 million a year ago due to costs tied to its acquisition and reduced market activity, according to Michael Ptasznik, the company’s chief financial officer.

Trading on TMX’s equity markets, including the Toronto Stock Exchange, TSX Venture and Alpha, fell 21 percent in the quarter from a year earlier, according to company statistics.

“We remain optimistic that activity in public listed markets will grow as the economic recovery takes hold,” Kloet said on the call.

Revenue from trading, clearing and depository rose 20 percent to C$74.5 million on contributions from CDS and Alpha, which operates an equities bourse. Alpha and CDS also contributed to a 9.2 percent increase in the company’s information services business. Listing fees fell 3.2 percent to C$52.2 million, partly because companies paid lower annual fees to list on TMX exchanges after their market values declined.

Kloet said he’s watching the impact of IntercontinentalExchange Inc.’s $8.2 billion takeover of NYSE Euronext on the global exchange industry, and TMX would consider “opportunistic” acquisitions around the world.

“We’ll continue to keep our eye on things that are going on around the world,” said Kloet, adding that TMX’s priority remains integrating Alpha and CDS.

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