TMX Group is an integrated, multi-asset class exchange group. TMX Group's businesses operate cash and derivative markets for multiple asset classes including equities, fixed income and energy. We also provide clearing facilities, data products and other services to the international financial community.
TMX Group Q4 earnings fall on weaker equity markets
TMX Group (TSE:X) said Wednesday its fourth quarter profits fell 20 percent as the company, which is in talks to be bought by a consortium of Canadian banks and pension funds, recorded less revenue from equity markets.
For the three months that ended December 31, the operator of Toronto's main stock exchange posted $54.2 million in earnings, or $0.70 per share, down 19.7 percent from $67.5 million, or $0.90 per share, a year earlier.
Adjusted for one-time items, including adjustments related to the potential Maple deal, and other tax adjustments, earnings fell to $0.74 per share, far below analysts' $0.84 per share estimate, according to Thomson Reuters.
Total revenues for the period also fell seven percent to $161.7 million, from $174.1 million in the same period last year.
TMX Group CEO Thomas Kloet said: "In a year with significant corporate development activity, we were pleased to deliver growth in revenue and operating income, reflecting strength across our major revenue lines.
"Despite uncertainty in the global economy, we attracted an increased number of new issuers to our equity markets compared to 2010 and continue to provide an attractive venue for raising capital."
Revenues from the company's issuer services fell 17 percent to $53.9 million, as fewer companies completed an IPO on the TSX or the TSX-Venture Exchange, and those that did list, did so with lower values.
Cash market revenues fell 29 percent to $22.6 million, as trading volumes on the TSX-Venture fell 50 percent to 11.77 billion securities in the fourth quarter, and fell 18 percent to 24.1 billion securities on the TSX.
TMX also said the decline is a result of the several changes it made to its equity trading fee schedule, effective March 1, 2011.
Energy market revenues also dropped one percent to $11.8 million, reflecting lower NGX crude oil volumes, as well as increased competition from voice brokers, like Shorcan Energy Brokers.
However, derivative markets posted a 20 percent rise in revenues, to $27.7 million, as trading on the company's Montreal Exchange (MX) increased 23 percent, and trading on its Boston Exchange (BOX) increased 40 percent.
On the TSX, the company reported an 18 percent decline in volume to 24.1 billion, and a nine percent decline in value to $334.6 billion. The number of transactions on the exchange rose nine percent to 53.1 million, while the number of issuers listed rose five percent to 1,587.
For the full year fiscal 2011, TMX posted a three percent rise in earnings to $243.6 million, or $3.17 per share, and an eight percent rise in total revenues to $673.5 million.
In Toronto, TMX shares rose 0.12 percent to $41.95, as of 9:42 am EDT. In 2011, the company's stock gained 12.8 percent.