February 5, 2015 / 1:35 PM / 4 years ago

UPDATE 2-ICE profit tops forecasts, CEO touts NYSE's potential

(Adds background on ICE and NYSE deal; quote from ICE CEO; share price)

By John McCrank

NEW YORK, Feb 5 (Reuters) - Intercontinental Exchange Inc on Thursday reported higher-than-expected quarterly earnings as the exchange and clearing house operator further integrated its $11 billion purchase of NYSE Euronext from the year-earlier quarter.

ICE said it earned $288 million in the fourth quarter, or $2.54 a share, compared with a loss of $176 million a share, or $1.83 a year earlier following the purchase of the New York Stock Exchange owner.

Excluding one-time items such as acquisition costs, ICE earned $2.59 a share, up 30 percent from a year earlier and 5 cents above the average estimate by analysts, according to Thomson Reuters I/B/E/S. The upside came from higher revenue and lower expenses than expected, UBS analyst Alex Kramm said in a note to clients.

ICE began as an energy exchange in 2000 and expanded quickly through acquisitions, with its growth influencing the evolution of the derivatives market from open outcry pits to electronic trading centers. The Atlanta-based company bought NYSE to gain a foothold in the interest rate futures business through control of Liffe, Europe’s No. 2 derivatives market.

Following the acquisition, ICE spun off Euronext through an IPO. The company sold its remaining 6 percent stake in the European bourse operator for $119 million in the latest quarter.

That, along with higher transaction and clearing fees, and market data and listings revenues, helped boost revenue at ICE by 49 percent to $800 million. Analysts had expected $785.3 million.

There has been much recent speculation among industry insiders that ICE will soon offload the New York Stock Exchange, as the highly competitive U.S. stock trading business does not fit with the derivatives franchise ICE has built.

But ICE expects NYSE to generate strong earnings per share growth over the next two years, mainly through listings and data services, and the company’s stakeholders want to share in those gains, ICE’s Chief Executive Jeffrey Sprecher said on a call with analysts.

When the promise of increased profits wanes, ICE will consider its options.

“If that business is a drag on us and we can’t use it to grow earnings, then it’s completely insignificant, and unlike a lot of people in the exchange space, you have seen us shed businesses,” Sprecher said.

For this year, ICE said it expects combined data services and listings revenue growth of around $100 million, excluding acquisitions.

Shares of ICE were up 4.3 percent at $224.25 on Thursday morning. (Reporting by John McCrank; Editing by Chizu Nomiyama and Tom Brown)

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