UPDATE 1-Brazil's BM&FBovespa net falls as expenses rise, revenue slips

Tue Feb 19, 2013 7:18pm EST

* Net income falls 22 percent, misses estimate in poll

* Expenses surged 47 pct, mainly on payroll and taxes

* Company does not report EBITDA; reiterates guidance

By Guillermo Parra-Bernal

SAO PAULO, Feb 19 (Reuters) - BM&FBovespa SA, Brazil's sole financial bourse, reported lower fourth-quarter net income after expenses surged and revenue from derivatives and equities trading came in below expectations.

Net income at the São Paulo-based company fell 22 percent on a quarter-on-quarter basis to 217.18 million reais ($111 million), well below the 255.6 million reais estimated in a Thomson Reuters poll of five analysts. Profit rose almost 14 percent on a year-on-year basis, BM&FBovespa said in a securities filing late on Tuesday.

Expenses drove profit down, thanks to a 47 percent surge from the third quarter. Sales, general and administrative expenses reached 256 million reais, the highest level in a year, following increases over 25 percent in payroll, outsourcing, marketing and tax-related items.

The company estimates capital expenditures between 260 million reais and 290 million reais for 2013, and between 170 million reais and 200 million reais for 2014. Guidance for operational expenses this year was reiterated at 560 million reais to 580 million reais - the same range as last year.

Revenue slipped 4.3 percent to 499.2 million reais from the prior quarter, fueled by a 9.4 percent decline in income from equities trading in the Bovespa segment. Derivatives trading revenue fell 6.4 percent at the BM&F segment in the fourth quarter.

Yet, the revenue result topped analysts' estimates in the poll, which put the number at 489.2 million reais for the fourth quarter.

Average revenue per contract rose for every item excluding interest-rate futures denominated in reais on a sequential basis, the company said. Still, average trading volumes for currency, exchange-traded funds, commodities and dollar-denominated rates futures fell sharply in the quarter.

The company did not report earnings before interest, tax, depreciation and amortization for the quarter or the year. The indicator, known as EBITDA, is a widely followed gauge of operational profitability. No reasons were given for the decision.

Financial income, or revenue from investment and non-core activities, fell 5.3 percent in the quarter.

Management will discuss fourth-quarter earnings with investors and reporters at an event on Wednesday in São Paulo.

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