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UPDATE 1-Brazil's BM&FBovespa misses profit estimates as revenue falls
November 6, 2012 / 11:06 PM / 5 years ago

UPDATE 1-Brazil's BM&FBovespa misses profit estimates as revenue falls

* Profit of 276.5 mln reais misses poll estimates

* Net revenue declines for first time since first quarter

* EBITDA down from second quarter; beats forecast

SAO PAULO, Nov 6 (Reuters) - BM&FBovespa SA, the world’s third-largest exchange, missed third-quarter profit estimates on Tuesday after revenue fell for the first time this year and expenses rose more than expected.

The São Paulo-based company posted net income of 276.5 million reais ($136 million), down 7.8 percent from 300 million reais in the prior three months, according to a securities filing on Tuesday. Profit, which fell for the first time since the fourth quarter, also suffered as financial expenses rose.

A Reuters poll with seven analysts predicted profit of 297.1 million reais in the quarter. Compared with the third quarter of 2011, profit at BM&FBovespa slipped 5.2 percent.

The results underscore flagging trading activity in equities and derivatives in the country, which has seen money from foreign investors leave this year as risk aversion related to Europe’s debt crisis stays high and uncertainty mounts over growing state intervention in some key sectors in Brazil.

Traded volumes of stocks and derivatives fell on a sequential basis, while the number of accounts under BM&FBovespa’s custody slipped 0.7 percent in the period. The participation of high-frequency trading rose to 9.8 percent of total trades from 9.4 percent in the second quarter - weighing on fee income.

Revenue at the BM&F derivatives segment slipped 8.5 percent, while that for the Bovespa equities segment fell 2 percent, the filing said. Net revenue, which includes trading, settlement, listing and custody income, dropped 3.6 percent in a quarter-on-quarter basis to 521.6 million reais.

The Reuters poll forecast net revenue of 518.6 million reais.

Sales, general and administrative expenses rose for the first time since the fourth quarter, driven by the higher cost of outsourced services and a slightly costlier payroll, the filing said. BM&FBovespa’s expenses rose 5.2 percent to 174.8 million reais - above the 168 million reais estimate in the poll.

Earnings before interest, tax, depreciation and amortization, or EBITDA, fell 7 percent on a quarterly basis, but climbed from a year earlier thanks to a higher revenue base. EBITDA, a gauge of operational profitability, was 375.6 million reais in the third quarter, beating the 368.1 million reais projection in the poll.

Management will host a news conference on Wednesday to discuss third-quarter results.

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