Euronext posted a sharply lower first-quarter operating profit, hit by a drop in revenue from derivatives trading and costs related to a proposed bid for the London Stock Exchange. Despite the decline, the bourse operator reiterated its forecast for a 2005 operating profit of 250 million euros ($306 million), based on business trends observed so far this year and cost-cutting measures. Its shares were up 2.9 percent at 28.25 euros at 1500 GMT.
The operator of the Paris, Amsterdam, Brussels and Lisbon bourses and of London's Euronext.Liffe derivatives market recorded a 4 percent rise in the number of derivatives contracts in May, while cash transactions were up 1.5 percent.
"It's still too soon to say if the second quarter will be better, but compared to the trend seen at the start of the year we are sensing a healthy boost, with listings doing well and an encouraging thrust in interest rate products," Chief Executive Jean-Francois Theodore told Reuters on the sidelines of Euronext's annual shareholder meeting.
Some analysts, however, said the target might be difficult to meet after earnings before interest, tax and amortisation (EBITA) came in at 63.8 million euros ($78.63 million) in the first quarter, down 22.5 percent from 82.4 million last year.
"The fact that they've reiterated the EBITA target is positive but it will nonetheless be challenging to achieve it, as business looks like it's been weak again in the second quarter and costs are usually higher in the second half of the year," said Alain Dupuis, analyst at OddoSecurities.
Net profit rose 7.3 percent to 45.3 million euros by new IFRS accounting standards, said Euronext, which is angling for control of the London Stock Exchange - Europe's biggest equity market.
A 34 percent drop in income tax expenses to 20.5 million euros helped to bolster Euronext's bottom line.
In May, Euronext announced a 6 percent year-on-year drop in quarterly turnover to 222.6 million euros, as weak volumes in its key derivatives and cash businesses offset higher revenues from its listing, settlement and custody activities.
Consultancy costs of 7 million euros linked to the LSE operation and an increased group cost base following the acquisition of financial software firm GL Trade lifted quarterly expenses to 158.7 million euros from 154.4 million.