UPDATE 2-D.Boerse focus on organic growth, disciplined on M&A
* Group business model proving its strength in tough times
* CEO sees no reason to change 2009 cost guidance
* Deutsche Boerse shares rise 3.5 pct, outpace peers
(Rewrites with CEO quotes, background, updates share)
By Peter Starck
FRANKFURT, May 12 (Reuters) - Deutsche Boerse's ()
organic growth focus is intact and its approach to mergers and
acquisitions remains disciplined as the group is highly
profitable and needs no transformational deal, its CEO said.
Chief Executive Reto Francioni -- in a conference call for
analysts on Tuesday, a day after Deutsche Boerse reported
first-quarter results above market consensus -- did not comment
on recurring media reports of merger plans with NYSE Euronext
(), the New York stock exchange operator.
He did say that the German group's integrated business
model, which combines cash equities and derivatives trading with
clearing, settlement and custody, was proving its worth in what
he described as "one of the toughest market environments we have
ever had" in the industry.
"We do not feel under any pressure to change our business
model or enter into a transformational deal," Francioni said.
"We are well positioned to weather the storm in the
financial markets," he said, referring to Deutsche Boerse's
January-March operating profit margin of 58 percent, down from
66 percent in the first quarter of 2008.
The financial results were "proof of the strength and
resilience of our integrated business model," he added.
Deutsche Boerse, which runs the Frankfurt Stock Exchange,
derivatives exchanges Eurex and ISE as well as settlement and
custody house Clearstream, beat market consensus by posting
earnings before interest, tax and amortisation (EBITA) of 311.6
million euros ($424.7 million) for the quarter to end-March,
down from 425.8 million euros a year earlier.
Revenue fell by a slightly smaller-than-expected 16 percent
year on year to 539.8 million euros, mainly due to lower cash
equities and derivatives trading volumes as a result of the
financial markets crisis.
ANALYSTS CHEER
Analyst comments on the results received by Reuters were
uniformly positive. Many applauded Deutsche Boerse's tight
control on costs, which fell 6 percent in the first quarter.
Francioni said he saw no reason to change the group's
full-year 2009 cost guidance of 1.28 billion euros.
Credit Suisse raised its target price for Deutsche Boerse to
75 euros from 65 euros and affirmed its "outperform" rating on
the stock.
"Our view on the stock remains positive, reflecting a
relatively attractive sum-of-the-parts valuation (in the region
of 59 euros per share) and modest exposure to cash equities in
terms of revenue with Clearstream and Eurex the two largest
components," Fox-Pitt Kelton said in a research note.
At 1355 GMT, Deutsche Boerse shares were up 3.5 percent at
57.50 euros, having hit a five-month high of 58.24 euros earlier
in the session, and outpacing the FTSE/Mondo Visione Exchange
index .FTMV, which was down 0.4 percent.
In slides prepared for the conference call, Deutsche Boerse
reiterated that its management's priorities included a "primary
focus" on organic growth opportunities as well as on operating
efficiency, cost discipline and tax optimization.
"Organic growth can be complemented by external growth
options if they make sense from a shareholder perspective as
well as from the point of view of our customers and the
company," Francioni said, adding that Deutsche Boerse was taking
"a disciplined approach to M&A".
Deutsche Boerse's executive board was paying "close
attention" to changes in the industry, something he said was the
"permanent duty of a management team".
($1=.7336 Euro)
(For more on Deutsche Boerse's Q1 results, see [ID:nLB142777],
for a FACTBOX on leading exchange groups, see [ID:nN11546201])
(For news from the Reuters Exchanges and Trading Summit, click
here) See also [ID:nN11169499]
(Editing by Sharon Lindores)
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