RPT-UPDATE 2-TMX Group profit tops estimates

Fri May 10, 2013 9:01am EDT

* Adj EPS C$0.78 vs est C$0.73

* Revenue rises 6 pct from year ago

* Financing and equity trading volumes fall

* Slip in commodity prices hurt resource company activity

By Alastair Sharp

TORONTO, May 10 (Reuters) - TMX Group Ltd, the operator of the Toronto Stock Exchange, reported a better-than-expected profit for the first quarter and said revenue rose 6 percent despite a tough economic backdrop that weighed on trading volumes and issuance.

But the comparison to year-ago results is complicated by the fact that TMX was acquired in September by a consortium of Canadian financial institutions who also rolled in the smaller Alpha exchange and Canadian Depository for Securities Ltd, a trading clearinghouse.

Including these additional assets in the 2012 numbers for TMX, income from operations fell 24 percent to C$60.2 million.

Net income for the quarter was C$37.8 million ($37.7 million), or 70 Canadian cents per share.

Excluding acquisition and other costs, earnings were 78 Canadian cents per share, beating the average analyst forecast of 73 Canadian cents, according to Thomson Reuters I/B/E/S.

Revenue rose to C$172.2 million in the quarter, from C$162.3 million a year ago. But revenue fell 5 percent from the first quarter due mainly to a drop in fees from share listings.

TMX also owns the Montreal derivatives exchanges and the TSX Venture Exchange, where listings are heavily weighted toward the resource sectors.

"The cyclical slowdown in commodities means that economies like Canada will suffer somewhat," TMX chief executive Tom Kloet said on a conference call with analysts and investors. "The most pronounced affect of these macroeconomic factors has been in our equity listing and trading business."

Analysts have suggested that TMX look outside of Canada for opportunities to diversify away from resources. But large acquisitions may be curtailed by the high level of debt TMX took on in the takeover by the bank-led Maple consortium last year.

Equity trading volumes fell by nearly 20 percent compared with the first quarter of 2012.

The number of follow-on offerings fell nearly 20 percent from the fourth quarter, while the value of those offerings fell by almost 30 percent.

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