Deutsche Boerse third quarter weighed by Iran settlement costs

FRANKFURT Tue Oct 29, 2013 3:00pm EDT

The plaque of the Deutsche Boerse AG is pictured at the entrance of the Frankfurt stock exchange February 1, 2012. REUTERS/Alex Domanski

The plaque of the Deutsche Boerse AG is pictured at the entrance of the Frankfurt stock exchange February 1, 2012.

Credit: Reuters/Alex Domanski

FRANKFURT (Reuters) - Deutsche Boerse (DB1Gn.DE) said its third-quarter earnings before interest and taxes more than halved, hit by lower trading activity at derivatives arm Eurex and the costs of a legal settlement related to the possible violation of U.S. sanctions.

Earnings before interest and taxes (EBIT) fell to 101 million euros ($139.1 million), down from 245.4 million in the year-earlier period, weighed by a 112.5 million euro provision linked to the U.S. case.

Earnings before interest and taxes at the Eurex derivatives market, traditionally a cash cow for Deutsche Boerse, saw a decline of 25 percent in the third quarter to 77.7 million euros.

A slump in trading of index derivatives led average daily trading volumes on Eurex to drop 16 percent in July, 8 percent in August, and 11 percent in September.

Earlier this week, Deutsche Boerse said it had received an offer from the United States to settle an investigation into the possible violation of U.S. sanctions against Iran for $152 million.

Deutsche Boerse said its boards have yet to decide whether to settle formally with the U.S. Office of Foreign Assets Control (OFAC) over allegations that the company's Clearstream unit may have violated U.S. economic sanctions tied to Iran.

Costs related to the OFAC investigation totaled 114.8 million euros in the quarter.

Excluding the items related to OFAC and cost cutting, Deutsche Boerse said EBIT came in at 224 million euros, in line with a Reuters poll carried out before news of the possible settlement.

Deutsche Boerse said if its business in the fourth quarter performs in a similar manner to 2012, the Group expects net revenue for the full year of approximately 1.9 billion euros, in the middle of the previously forecast range approximately 1.8-2 billion euros.

($1 = 0.7262 euros)

(Reporting by Edward Taylor; Editing by Victoria Bryan and David Evans)