UPDATE 2-D.Boerse focus on organic growth, disciplined on M&A

* Exchange group has no need for "transformational deal"

* Group business model proving its strength in tough times

* CEO sees no reason to change 2009 cost guidance

* Deutsche Boerse shares rise 3.5 pct, outpace peers

(Rewrites with CEO quotes, background, updates share)

By Peter Starck

FRANKFURT, May 12 (Reuters) - Deutsche Boerse's (DB1Gn.DE) organic growth focus is intact and its approach to mergers and acquisitions remains disciplined as the group is highly profitable and needs no transformational deal, its CEO said.

Chief Executive Reto Francioni -- in a conference call for analysts on Tuesday, a day after Deutsche Boerse reported first-quarter results above market consensus -- did not comment on recurring media reports of merger plans with NYSE Euronext (NYX.N), the New York stock exchange operator.

He did say that the German group's integrated business model, which combines cash equities and derivatives trading with clearing, settlement and custody, was proving its worth in what he described as "one of the toughest market environments we have ever had" in the industry.

"We do not feel under any pressure to change our business model or enter into a transformational deal," Francioni said.

"We are well positioned to weather the storm in the financial markets," he said, referring to Deutsche Boerse's January-March operating profit margin of 58 percent, down from 66 percent in the first quarter of 2008.

The financial results were "proof of the strength and resilience of our integrated business model," he added.

Deutsche Boerse, which runs the Frankfurt Stock Exchange, derivatives exchanges Eurex and ISE as well as settlement and custody house Clearstream, beat market consensus by posting earnings before interest, tax and amortisation (EBITA) of 311.6 million euros ($424.7 million) for the quarter to end-March, down from 425.8 million euros a year earlier.

Revenue fell by a slightly smaller-than-expected 16 percent year on year to 539.8 million euros, mainly due to lower cash equities and derivatives trading volumes as a result of the financial markets crisis.

ANALYSTS CHEER

Analyst comments on the results received by Reuters were uniformly positive. Many applauded Deutsche Boerse's tight control on costs, which fell 6 percent in the first quarter.

Francioni said he saw no reason to change the group's full-year 2009 cost guidance of 1.28 billion euros.

Credit Suisse raised its target price for Deutsche Boerse to 75 euros from 65 euros and affirmed its "outperform" rating on the stock.

"Our view on the stock remains positive, reflecting a relatively attractive sum-of-the-parts valuation (in the region of 59 euros per share) and modest exposure to cash equities in terms of revenue with Clearstream and Eurex the two largest components," Fox-Pitt Kelton said in a research note.

At 1355 GMT, Deutsche Boerse shares were up 3.5 percent at 57.50 euros, having hit a five-month high of 58.24 euros earlier in the session, and outpacing the FTSE/Mondo Visione Exchange index .FTMV, which was down 0.4 percent.

In slides prepared for the conference call, Deutsche Boerse reiterated that its management's priorities included a "primary focus" on organic growth opportunities as well as on operating efficiency, cost discipline and tax optimization.

"Organic growth can be complemented by external growth options if they make sense from a shareholder perspective as well as from the point of view of our customers and the company," Francioni said, adding that Deutsche Boerse was taking "a disciplined approach to M&A".

Deutsche Boerse's executive board was paying "close attention" to changes in the industry, something he said was the "permanent duty of a management team". ($1=.7336 Euro) (For more on Deutsche Boerse's Q1 results, see [ID:nLB142777], for a FACTBOX on leading exchange groups, see [ID:nN11546201]) (For news from the Reuters Exchanges and Trading Summit, click here) See also [ID:nN11169499]

(Editing by Sharon Lindores)