ICE profit falls 8 percent, but tops expectations

Wed May 1, 2013 10:04am EDT

(Reuters) - IntercontinentalExchange Inc (ICE.N), which is buying NYSE Euronext NYX.N for $8.2 billion, reported an 8 percent drop in first-quarter profit, citing acquisition costs and lower North American natural gas trading volumes.

The Atlanta-based derivatives exchange and clearinghouse operator said on Wednesday that net income fell to $135.4 million, or $1.85 a share, from $147.9 million, or $2.02 a share, a year earlier.

Excluding costs involving the NYSE deal and other one-time items, earnings were $2.03 per share. That beat the analysts' average estimate by 6 cents, according to Thomson Reuters I/B/E/S.

Slightly higher-than-expected revenue and lower-than-anticipated expenses, along with a favorable tax rate, helped ICE beat earnings estimates, UBS analyst Alex Kramm said in a note to clients.

Shares of ICE were up 1 percent at $164.49 shortly after the market opened.

Revenue fell 4 percent to $351.9 million. North American natural gas revenue dropped 28 percent on a similar-sized decrease in trading volumes.

Transaction and clearing fee revenue fell 7 percent to $299.7 million. Futures average daily volume declined 4 percent to 3.6 million contracts, with revenue from ICE's credit default swap trade execution, processing and clearing business down 16 percent to $33 million.

Market data revenue rose 12 percent to $40.9 million, and other consolidated revenues were $11.3 million.

Operating expenses were up 8 percent at $151.8 million.

The company said in December that it planned to buy New York Stock Exchange operator NYSE in a deal that will give ICE control of Liffe, Europe's second-largest derivatives market, to help expand into the interest rate futures business.

ICE said it expected acquisition expenses from the transaction to be in the range of $10 million to $12 million in the second quarter.

NYSE said on Tuesday that its first-quarter profit rose 44 percent from a year earlier, due largely to an increase in European derivatives trading volumes and lower costs.

(Reporting by John McCrank; Editing by Gerald E. McCormick, Jeffrey Benkoe and Lisa Von Ahn)