ICE profit rises on futures volume growth
NEW YORK (Reuters) - IntercontinentalExchange Inc. (ICE.N) posted a higher-than-expected quarterly profit on Thursday on strong volume growth in its futures business.
The electronic energy market and soft commodity exchange reported second-quarter net income of $53.7 million, or 75 cents per share, compared with $31 million, or 52 cents per share, a year earlier.
The results include $7 million in after-tax costs from ICE's failed takeover offer for the Chicago Board of Trade. ICE was engaged until recently in a bidding war with the Chicago Mercantile Exchange to acquire CBOT.
Excluding these costs, the company earned 85 cents per share, beating the analysts' average forecast of 76 cents, according to Reuters Estimates.
"It's a good number when you strip out everything," Sandler O'Neill analyst Richard Repetto said.
He said ICE benefited from a lower tax rate in the latest quarter, which added $3.6 million to net income.
During the second quarter, ICE also entered into an agreement to acquire the Winnipeg Commodity Exchange, known for its canola futures contract, for C$40 million. The deal would expand ICE's offerings, which some analysts have said the exchange needs to do in order to become a global, multi-product marketplace.
"We continue to build on our central role in global commodities markets... through a combination of organic growth, acquisitions and partnerships," Chief Executive Jeffrey Sprecher said in a statement.
REVENUE RISES ON TRADING VOLUME
Revenue rose nearly 86 percent to $136.7 million, exceeding the analysts' average forecast of $133 million compiled by Reuters Estimates.
The company enjoyed strong futures volume growth at its UK-based ICE Futures and at the New York Board of Trade, which it acquired in January.
Average daily volume for ICE's global futures and over-the-counter contracts was 1.4 million during the quarter, as energy futures trading became increasingly electronic.
Electronic trading in NYBOT's soft commodity futures contracts -- introduced after the acquisition -- has attracted new market users and pushed volume up, ICE said.
ICE said NYBOT, which trades soft commodity contracts, will be renamed ICE Futures US effective September 3.
During the quarter, ICE also acquired exclusive rights to trade options and contracts on the benchmark Russell U.S. equity indexes.
Transaction fees accounted for $117.4 million of total revenue during the quarter, most of it driven by higher futures trading.
Atlanta-based ICE said there will be costs of $2.5 million to $3 million in the second half of 2007 from ICE Clear Europe, its European clearing house.
