* Operating income slips, company looks to cut costs
* Shares up 1.6 percent
By Alastair Sharp
TORONTO, Aug 1 Shares in TMX Group Ltd,
owner of Canada's biggest stock exchange, gained on Thursday
after the company reported a better-than-expected second-quarter
profit, helped by the sale of a fixed income service but limited
by limp trading volumes.
The Toronto Stock Exchange operator's net income was C$25.5
million ($24.8 million), or 47 Canadian cents a share, on
revenue of C$182.3 million.
Comparing TMX's performance with that of the year-before
quarter is complicated because a group of Canadian financial
institutions bought TMX last September and combined it with the
smaller Alpha stock exchange and the Canadian Depository for
Securities Ltd, a trading clearinghouse.
The company reported adjusted earnings of 89 Canadian cents
a share, excluding charges related to the sale of a price index,
an increase in deferred income tax liabilities, and charges
related to the amortization of intangibles
In a deal that closed in April, TMX sold its PC-Bond
fixed-income pricing service for C$155.1 million in cash and
The company's second-quarter adjusted earnings of 74
Canadian cents a share topped analysts' expectations of 69
Canadian cents, according to Thomson Reuters I/B/E/S, which had
already adjusted its estimate to include a charge of 15 Canadian
cents related to the amortization of intangibles.
When TMX's results in the year-before quarter are combined
with those of Alpha and the clearinghouse, the 2013 quarter
shows a 21 percent drop in operating income and a 9 percent jump
in revenue, which was C$167.5 million a year earlier.
TMX said it was looking at ways to cut costs, but would not
skimp on road shows to encourage companies to list on TMX
exchanges or on a planned technology upgrade.
"It is tempting when markets are down to step back from
these business development efforts to save money, but in our
view, this is short-term thinking," Tom Kloet, the company's
chief executive, told investors on a conference call.
TMX also owns the Montreal derivatives exchanges and the
small-cap TSX Venture Exchange, where listings are heavily
weighted toward the resource sector.
The company has struggled to offset the cyclical swing away
from commodities and will soon face renewed competition as a new
stock exchange, Aequitas, readies to enter the fray.
Meanwhile, the tough economic backdrop has also weighed on
trading volumes and new issues on the Toronto Stock Exchange and
the smaller TMX bourses.
Executives said that higher listing-fee revenues had helped
produce a rise in overall revenue from the previous quarter.
TMX began transferring its trading platforms onto a much
faster technology earlier this year in a move that might attract
more high-frequency traders, who use algorithmic programs to buy
and sell stocks. It expects the move to be finished by the
middle of next year.
TMX shares were 1.7 percent higher at C$45.95 at
mid-morning on Thursday on the Toronto Stock Exchange.