UPDATE 1-Deutsche Boerse swings to first ever quarterly loss

Tue Feb 16, 2010 8:37pm GMT

Quotes

   

* Deutsche Boerse Q4 net loss 33 million euros

* loss due to 415.6 mln eur ISE-related impairment in Q4

* To propose flat dividend of 2.10 euros a share.

(adds background, detail)

FRANKFURT, Feb 15 (Reuters) - Deutsche Boerse (DB1Gn.DE) announced a fresh round of cost cuts after it swung to its first ever quarterly loss, hit by falling volumes in options and share trading and a hefty impairment charge at U.S. options arm ISE.

The exchange operator posted a fourth quarter net loss of 33 million euros, compared with a 222 million euros profit in the year-earlier period. Analysts had nonetheless expected a much wider loss of 62 million euros. [ID:nLDE6191HW]

Deutsche Boerse aims to attain annual savings of 50 million euros from 2011 onward by cutting management headcount, potentially outsourcing further jobs, and investing in new growth initiatives.

Boerse said costs would not rise above 1.25 billion euros in 2010, however only when excluding 40 million euros in provisions related to implementing cost reduction plans.

"We will further expand our clear strengths in technology, risk management services and product innovation while maintaining our strict approach to cost management," Chief Executive Reto Francioni said in a statement.

The Frankfurt-based company blamed a loss before interest and taxes of 166.3 million euros in the fourth quarter on its previously announced 415.6 million impairment charge related to its U.S.-based International Securities Exchange unit. [ID:nLDE60I2H8]

ISE's daily average trading volume fell 4.7 percent in 2009, to 960.2 million contracts, but market share rebounded in January to account for 22.9 percent of overall options trading. [ID:nN01189471]

At the start of February, Boerse said that Xetra and floor trading volumes had rebounded in January. [ID:nWEA8164]

Quarterly revenue fell to 505.4 million euros largely due to the reluctance of market participants to trade on the cash and derivatives markets, the company said late on Tuesday.

Its renewed focus on savings comes as rival NYSE Euronext said earlier this month it expected revenue growth, rather than cost cuts, to drive earnings this year. [ID:nLDE6180CD]

Rival exchange operators such as the London Stock Exchange (LSE.L) and Nasdaq OMX Group (NDAQ.O) have seen earnings shrink as they fought to cut fees in a bid to keep upstart rivals at bay. [ID:nLDE61F15L] [ID:nLDE61B173] [ID: nN08184802]

While Deutsche Boerse relies less on cash equities trading than do many other European stock exchange operators, competition from alternative platforms such as Nomura Holdings Inc's (8604.T) Chi-X continue to hurt the exchange's equities trade revenues and its bottom line.

(Reporting by Edward Taylor, Editing by Christiaan Hetzner)