Intercontinental Exchange Profit Beats Analyst Estimates

Intercontinental Exchange Inc., which agreed to buy NYSE Euronext for $8.2 billion in December, reported first-quarter adjusted earnings that beat analyst expectations.

Net income declined to $135.4 million, or $1.85 a share, in the three months ended March 31, from $147.9 million, or $2.02 a share, a year earlier, the owner of the second-largest U.S. futures market said in a statement. Excluding $17 million in costs related to its NYSE Euronext purchase and other items, the company earned $2.03 per share, exceeding analyst estimates of $1.97 per share, according to a survey conducted by Bloomberg.

Average daily trading this quarter at Intercontinental’s exchanges is up 15 percent from the same period a year ago to 3.8 million trades a day, Howard Chen, an analyst with Credit Suisse Group AG said in a note to clients today. The company, also known as ICE, had expense costs of $131 million, which was down 6 percent from a year ago and below Chen’s $135 million forecast, the New York-based analyst said.

“While we like the growth profile of the standalone ICE franchise, we also see multiple channels of value creation and significant cash generation derived from a pro-forma ICE/NYSE Euronext combination for several years to come,” Chen said in the note.

Rate Derivatives

Intercontinental will gain markets in interest-rate derivatives from its purchase of NYSE Euronext, which is expected to close in the second half of this year. Both Intercontinental and NYSE Euronext plan to hold shareholder votes on June 3 to seek approval of the deal.

Intercontinental rose 2.2 percent to $166.56 today. The shares have advanced 34.5 percent this year.

A 27 percent drop during the first quarter in natural gas trading at the company’s ICE Futures Europe market pushed total energy trading down 4.3 percent, the Atlanta-based company said last month. Energy transactions make up about 88 percent of the company’s total volume, according to Rich Repetto, an analyst at Sandler O’Neill & Partners LP in New York. Futures on equity indexes at its ICE Futures U.S. market fell 19.6 percent, driving its financial volume to decline 12 percent.

Revenue fell 3.6 percent to $351.9 million in the quarter from $365.2 million.

NYSE Euronext said yesterday that its first-quarter profit rose 45 percent as revenue increased and it cut costs. Net revenue from the New York-based company’s derivatives units rose 14 percent in the quarter while equity trading revenue, excluding regulatory fees and liquidity payments, dropped 5.6 percent.

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