Deutsche Börse AG posts continued profit growth in Q3/2016

Deutsche Börse AG published its results for the third quarter of 2016 on Thursday. Consolidated net revenue rose by 1 per cent, to €558.5 million (Q3/2015: €555.0 million), despite the weaker market environment. Thanks to structural efficiency measures, adjusted operating costs declined by 5 per cent in the period under review, to €275.7 million (Q3/2015: €290.6 million). Adjusted consolidated net profit thus rose by 6 per cent, to €190.7 million (Q3/2015: €179.2 million). Basic earnings per share, adjusted for non-recurring effects, increased to €1.02 (Q3/2015: €0.97).

Net revenue for the first nine months of 2016 increased by 6 per cent, to €1,769.7 million (Q1-3/2015: €1,666.8 million). Besides consolidation effects, the increase was attributable to the positive performance of index derivatives and in the commodities business of the Eurex segment, in the international business of the Clearstream segment, and in the index business of the Market Data + Services segment. Adjusted operating costs of €831.3 million for the first nine months of the year were only slightly higher than in the same period of the previous year (Q1-3/2015: €824.5 million), in spite of consolidation effects. As a result, adjusted consolidated net profit for the period rose by 11 per cent, to €630.5 million (Q1-3/2015: €565.6 million). Basic earnings per share, adjusted for non-recurring effects, increased to €3.37 (Q1-3/2015: €3.07).

Gregor Pottmeyer, Chief Financial Officer of Deutsche Börse AG, commented on the results: “During the third quarter, we were able to compensate for the weaker market environment through growth areas such as commodities and Clearstream’s international business and to increase net revenue overall. Besides that, the continued implementation of structural efficiency measures contributed notably to the solid earnings growth. Based on the developments in the first nine months, we are confirming our earnings guidance for 2016.”

As part of its growth strategy “Accelerate”, Deutsche Börse Group continues to optimise its portfolio of shareholdings. In this context, it sold around one third of its stake in BATS Global Markets, Inc. (BATS) on 26 October for around US$86 million. With this, the company expects a positive impact on the earnings after tax of around €23 million in the fourth quarter 2016. The stake in BATS resulted from a participation of the divested International Securities Exchange Holdings, Inc. (ISE) in Direct Edge Holdings, LLC, which later merged with BATS.

Results for Q3/2016
Deutsche Börse Group’s net revenue rose slightly compared to the same quarter of the previous year, by 1 per cent to €558.5 million (Q3/2015: €555.0 million). The impact of the weaker environment on European cash markets was partially offset by the commodities business in the Eurex segment and the international business in the Clearstream segment. Net revenue was also boosted by consolidation effects, including the foreign exchange platform 360T®, which has been part of the Group since the fourth quarter of 2015. Net interest income from the banking business rose markedly, to €22.3 million (Q3/2015: €13.9 million). The rise was largely attributable to the renewed increase in US interest rates, and to the fact that the Group passed on negative interest rates on deposits plus a mark-up.

The Group sold International Securities Exchange Holdings, Inc. (ISE) during the second quarter of 2016. Accordingly, the consolidated income statement was prepared on the basis of continued operations, meaning the previous year’s figures exclude ISE’s contribution.

At €303.7 million, operating costs were down year-on-year (Q3/2015: €319.9 million). Among other factors, the decline was due to structural efficiency measures which the Group has been implementing since 2015. Non-recurring effects during the period under review of €28.0 million were largely in line with the previous year’s figure (Q3/2015: €29.3 million). During the period under review, non-recurring effects largely included costs related to the planned merger with the London Stock Exchange Group, as well as costs for the integration or disposal of subsidiaries. Adjusted for these non-recurring effects, costs were down by 5 per cent year-on-year, despite consolidation effects, to €275.7 million (Q3/2015: €290.6 million).

The result from equity investments amounted to €3.2 million in the third quarter (Q3/2015: €0.1 million). Adjusted for a non-recurring effect, the previous year’s figure was €1.5 million.

Deutsche Börse Group’s earnings before interest and tax (EBIT) was €258.0 million for the period under review (Q3/2015: €235.2 million). Excluding the non-recurring effects set out above, EBIT amounted to €286.0 million, an 8 per cent increase compared to the previous year (Q3/2015: €265.9 million).

The Group’s financial result was €–17.4 million (Q3/2015: €–14.3 million). The Group’s adjusted effective tax rate of 27 per cent for the third quarter of 2016 was in line with expectations (Q3/2015: 26 per cent). Accordingly, consolidated net profit for the period was €170.0 million (Q3/2015: €155.8 million); excluding the non-recurring effects described above, it was €190.7 million (Q3/2015: €179.2 million). Basic earnings per share, based on a weighted average of 186.8 million shares, amounted to €0.91 (Q3/2015: €0.84). Adjusted for non-recurring effects, basic earnings per share stood at €1.02 (Q3/2015: €0.97).