TMX profit drops as listings, trading slows
By Jennifer Kwan
(Reuters) - TMX Group (X.TO: Quote), operator of the Toronto Stock Exchange and the target of a $3.8 billion proposed takeover, reported a steeper-than-expected drop in quarterly profit on Friday as a rocky global economic recovery held back equity trading and financing revenue.
Overall revenue fell 7 percent on weakness in cash markets trading and issuer services such as fees for new listings. The decline might have been worse if not for stronger performances in derivatives trading and other business lines.
In addition to the TSX, the company owns the TSX Venture Exchange for small-capitalization stocks and the Montreal Exchange for derivatives.
"Like the fourth quarter of 2011, the first-quarter 2012 proved to be less profitable for TMX Group because of continuing global economic uncertainty," Chief Executive Tom Kloet said in a conference call with analysts. "Unlike previous economic downturns, this uncertainty has resulted in steep declines in the level of equity trading and financing activities."
Net income fell 10 percent to C$56.8 million ($57.02 million), or 76 Canadian cents a share, from C$63.1 million, or 84 Canadian cents, a year ago.
Three analysts, on average, had expected a profit of 88 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue dropped to C$162.3 million, compared with an average forecast of C$172.5 million.
Kloet said TMX's performance wasn't unique as "our global exchange peers are experiencing the same phenomena as well as similar effects on financial performance." Continued...