CME Group nearly doubles profit
CHICAGO -- CME Group Inc.'s profit nearly doubled in the fourth quarter as its acquisition of the Chicago Board of Trade helped boost volume at the world's largest financial exchange company.
CME Group, which also operates the Chicago Mercantile Exchange, earned $201.1 million, or $3.75 per share, in the last three months of 2007, up 96 percent from profit of $102.6 million, or $2.91 per share, in the fourth quarter of 2006.
The profits topped the consensus estimate of analysts surveyed by Thomson Financial, who had forecast $3.62 per share.
Revenue, which CME Group collects by charging fees for hosting and clearing trades, rose 88 percent to $529.5 million from $281.3 million. Analysts expected revenue of $535.3 million.
CME Group hosts trading of contracts that derive their value from an underlying commodity or event. Investors use these contracts to shelter their investment portfolios from swings in interest rates or gyrations in the stock market.
Trading volume on the Chicago-based company's exchanges surged 23 percent in the fourth quarter to average 10.6 million contracts a day. Full-year trading volume jumped to nearly 2.8 billion contracts worth more than $1.2 quadrillion, the company said.
CME Chief Executive Craig Donohue said the company in 2007 "delivered exceptional financial results while executing an historic merger, integrating operations, providing transaction processing services, launching new products and continuing to expand globally in Europe, Asia and South America."
So far in 2008, volumes have grown 65 percent compared with the same period last year, the company said.
Banc of America Securities analyst Christopher Allen said in a note to investors CME had a "solid quarter as revenues continued to benefit from strong activity levels and a higher-than-expected rate per contract." He and other analysts said CME is clearly off to a strong start in 2008.
For 2007, CME Group earned $658.5 million, or $14.93 per share, compared with profit of $407.3 million, or $11.60 per share, in 2006. Revenues rose to $1.76 billion from $1.09 billion, up 61 percent.
CME Group last month confirmed it is considering offering about $11.3 billion for Nymex Holdings Inc., which hosts trading of energy and metals contracts.
Shares in the company fell $30.20, or 4.9 percent, to $588.80 Tuesday. The stock rose more than 20-fold in its first five years after going public at $35 in December 2002, hitting a peak of $714.48 two months ago.