UPDATE 2-CME Group earnings miss estimates due to weak volumes

Thu Jul 31, 2014 11:22am EDT
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(Recasts with comments from conference call)

By Tom Polansek

CHICAGO, July 31 (Reuters) - CME Group Inc will cut costs by reducing hiring and employee travel to help compensate for weak trading volumes, the chief financial officer said on Thursday after the world's largest futures market operator posted lower-than-expected earnings.

Shares fell 2.7 percent after CME Group said trading volumes, along with clearing and transaction fees, dropped 12 percent in the second quarter as volatility levels slumped while expenses were up 3.7 percent.

"We have refocused our teams on wringing out discretionary expenses where possible for the remainder of the year," CFO Jamie Parisi told analysts on a conference call to discuss earnings.

Net profits for the owner of the Chicago Board of Trade and Chicago Mercantile Exchange fell to $263.8 million, or 79 cents a share, from $311.2 million, or 93 cents a share, a year earlier.

Excluding a $14.5 million settlement of CME's claim against bankrupt brokerage MF Global and other special items, earnings were 77 cents a share. That was below analysts' expectations of 79 cents, according to Thomson Reuters I/B/E/S.

Revenue dropped 10 percent to $731.6 million

"The miss was driven by lower revenues as well as higher expenses," said Richard Repetto, a principal for Sandler O'Neill.   Continued...