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UPDATE 1-Deutsche Boerse Q2 results drop on sluggish trading
July 24, 2014 / 6:47 PM / in 3 years

UPDATE 1-Deutsche Boerse Q2 results drop on sluggish trading

* Q2 EBIT 235.8 mln euros after 256.3 mln yr-earlier

* Q2 net profit 159.3 mln euros after 171 yr-earlier

* Q2 revenue of 488 mln euros after 497 mln yr-earlier

* CFO confirms 2014 outlook (Adds details, context)

FRANKFURT, July 24 (Reuters) - Deutsche Boerse reported an 8 percent drop in second-quarter operating profit as sluggish trading of stocks and derivatives weighed on the exchange operator’s revenues.

Earnings before interest and tax (EBIT) came in at 235.8 million euros ($318 million) in the second quarter, in line with an average expectation of 234 million euros in a Reuters poll of banks and brokerages.

Net profit fell 8 percent to 159 million euros, while revenues were down 2 percent at 488 million euros.

Deutsche Boerse, like other exchanges, is suffering from low trading volumes as new bank regulation has forced trading desks to put up more collateral for big bets and as banks cut back their trading operations.

Trading activity also has remained subdued in Deutsche Boerse’s home market, despite political crises in the Ukraine and the Middle East.

Trading volatility in Germany is hovering near historic lows, which discourages activity particularly from high-frequency traders, who make up more than 40 percent of trading volume on the Frankfurt Stock Exchange, traditionally seek to exploit spikes and slides in the stock market.

“Second-quarter results were negatively impacted by the low equity market volatility and extremely low interest rates,” Deutsche Boerse Chief Financial Officer Gregor Pottmeyer said in a statement on Thursday, adding the group considered itself in a good position to meet its 2014 targets.

Deutsche Boerse is targeting full-year revenues of between 1.9 billion euros and 2.1 billion euros, adjusted operating profit of between 850 million and 1.05 billion euros, and adjusted net profit of 600-750 million euros.

After a strong start into the year, Deutsche Boerse had been seen expected t reach the upper end of the ranges, but it is now seen as hitting the middle.

Separately, Deutsche Boerse said that it would propose to the 2015 annual general meeting to elect Amy Yok Tak Yip from Hong Kong-based RAYS Capital Partners to the supervisory board. Yip has previously worked for the Hong Kong Monetary Authority and DBS Bank.

$1 = 0.7424 Euros Reporting by Arno Schuetze, editing by Edward Taylor and Jane Baird

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