NYSE Profit Exceeds Estimates on Derivatives But Trading Volume Down

(Bloomberg) — NYSE Euronext, the U.S. exchange operator being bought by IntercontinentalExchange Inc., reported second-quarter earnings that beat analysts’ estimates as revenue from derivatives trading rose and costs fell.

Net income climbed 38 percent to $173 million from $125 million a year earlier, the New York-based company said today in a statement today. Earnings excluding some items were 63 cents a share, compared with the 58-cent median estimate of analysts surveyed by Bloomberg.

“The results today indicate that ICE is getting a stronger company than initially thought,” Peter Lenardos, an analyst at RBC Capital Markets in London, wrote in e-mailed comments. “This will likely be NYSE’s last results before its acquisition by ICE.” Lenardos has a sector-perform recommendation on the shares, similar to hold.

While NYSE’s earnings increased during the first three months of 2013, they had dropped 26 percent in 2012 as U.S. stock trading slumped on exchanges. IntercontinentalExchange, the 12-year-old energy and commodity futures bourse known as ICE, is buying the 220-year-old exchange operator as profitability of equities trading declines and derivatives takes over. European Union regulators approved the deal on June 24.

Business Plan

“We continue to execute solidly against our business plan as we build momentum toward closing the ICE deal,” Chief Executive Officer Duncan L. Niederauer said in the statement. “Our shareholders and the European Commission have approved the transaction, and we are working with the College of Regulators in Europe and other regulators to obtain all the appropriate remaining approvals.”

NYSE’s board declared a third-quarter dividend of 30 cents a share provided the ICE transaction is not completed by the record date of Sept. 16.

U.S. exchange-listed equity trading volume averaged 6.58 billion a day last quarter, down 3.5 percent from the same period in 2012, data compiled by Bloomberg show. Options trading in the U.S. slowed to a daily average of 15.9 million contracts last year from a ninth-consecutive record of 18.1 million in 2011, data from the Chicago-based Options Clearing Corp. show. So far in 2013, it has averaged 17 million.