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Thursday, October 29, 2009

CME profit dips 20%, still beats Street

(Reuters) — CME Group Inc. said on Thursday its adjusted quarterly profit dropped 20 percent, beating expectations, as cost-cutting helped the big derivatives exchange operator stem slumping volumes.

Expenses fell 10 percent in the third quarter, while average daily volume dropped 23 percent, CME said, adding foreign exchange and energy contracts have so far made October a "strong volume month."

"As the economy continues to stabilize, there is room for further organic growth in our core business," CME Executive Chairman Terry Duffy said in a statement.

The world's top derivatives exchange is sensitive to a possibly big regulatory revamp of markets. Its shares, which were little changed before the open, could benefit as more over-the-counter contracts are exchange-traded and cleared, but could be hurt if U.S. regulators impose new commodity-market position limits.

Adjusted to exclude $21 million in one-time items, CME earned $223 million, or $3.35 per share, in the quarter that ended Sept. 30, down from $278 million, or $4.13 per share, in the same period a year earlier.

Analysts on average expected the Chicago-based company to earn $3.29 per share, according to Thomson Reuters I/B/E/S. Revenue fell 17 percent to $650 million, meeting expectations.

Including one-time items, CME 's profit was $202 million, or $3.04 per share.

Derivatives volumes continued a multiquarter slump on the heels of the financial crisis. Clearing and transaction fees, accounting for more than 80 percent of the company's total revenue, dropped 18 percent from a year ago, but edged slightly higher from the previous quarter.

The closely watched rate-per-contract figure was 83 cents in the quarter, in line with expectations.

CME stock was trading down $3.02, or just under 1 percent, at $305.00 Thursday morning.

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