Deutsche Boerse Second-Quarter Earnings Fall on Trading

Deutsche Boerse AG, operator of the Eurex derivatives market and the Frankfurt stock exchange, said second-quarter profit fell 8.2 percent as trading volumes declined.

Net income for the quarter dropped to 171 million euros ($227 million) from 186.2 million euros in the second quarter of 2012. Earnings before interest and taxes dropped to 256.3 million euros from 278.8 million euros a year earlier, the Frankfurt-based company said in an e-mailed statement today.

Deutsche Boerse and its rivals, including NYSE Euronext and London Stock Exchange Group Plc, have seen trading volumes drop following the global financial crisis of 2008. Traditional exchanges have also lost market share to new venues such as Bats Chi-X Europe. The German company says it’s focused on organic growth and Asia as it tries to drive profits.

“For the remainder of the financial year 2013, Deutsche Boerse expects to see a slight deterioration compared with the forecasts for its operating environment made in its 2012” statement, the company said on its website today.

“If the capital market environment and investor confidence fail to improve and the markets continue to be impacted by uncertainty regarding global economic performance and the future situation in the euro zone, business activity would be on a level comparable to the second half of 2012,” the company said.

In such a case full-year net revenue would fall 7 percent to 1.8 billion euros. If the environment improves “significantly” net revenue will rise to 2 billion euros, Deutsche Boerse said.

Equity Investments

The second-quarter results included a 3 million euro one-time payment from equity investments the firm has in the European Energy Exchange, Scoach Holding SA and Direct Edge Holdings LLC, Deutsche Boerse said.

Net revenue fell 1.9 percent to 497.1 million euros from 506.7 million euros, the company said, citing a “difficult capital market environment.” Operating costs rose to 243.8 million euros in the quarter from 228.9 million euros. Costs included a 9.7 million euro one-time payment related to the company’s cost-cutting program and mergers and acquisitions.

Deutsche Boerse plans to eliminate about 250 jobs as part of a program to reduce expenses by as much as 70 million euros annually by 2016. The exchange operator will spend 90 million euros to 120 million euros implementing the proposals.

CME Deal

CME Group Inc. previously approached Deutsche Boerse to consider starting talks on a merger, four people familiar with the situation said in February. The European Commission blocked Deutsche Boerse’s acquisition of NYSE Euronext last year, citing concern over competition in the markets for derivatives and clearing.

Eurex, Europe’s largest derivatives exchange, reported earnings before interest and tax fell 12 percent to 114.9 million euros. Xetra, the exchange’s electronic equity trading business, reported earnings before interest and tax that were little changed at 16.9 million euros from 17 million euros a year ago.

Clearstream, Europe’s largest settlement house, said earnings fell 3 percent to 78.1 million euros. Profit for the market data and services segment slid 8 percent to 46.4 million euros.