Deutsche Boerse Casts Doubts On Full-Year Profit Goal After Weak 2Q

By Ulrike Dauer Features Dow Jones Newswires

Deutsche Boerse AG (DB1.XE) on Wednesday put a question mark on reaching the lower end of its full-year profit guidance after profit fell in the second quarter because of subdued volatility in financial markets, disappointing analysts' expectations for a rise.

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Shares of the exchange operator are down 2.5% in after-hours trading.

"Even though business development was slightly below our expectations, from our point of view it is still possible to achieve the lower end of our earnings forecast for the full year -- provided that the cyclical environment improves in the second half of the year," said Chief Financial Officer Gregor Pottmeyer.

Deutsche Boerse had targeted a 10% to 15% rise in net profit this year.

A Deutsche Boerse spokesman said the "cyclical environment" refers to market volatility, trading volumes, but also includes interest rates and the economic situation.

Quarterly net profit fell 3.9% to EUR176.3 million ($205.8 million) from EUR183.5 million. Six analysts polled by Factset on average had expected a 24% jump in net profit to EUR227 million.

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Net revenue rose 3.8% to EUR623.6 million from EUR600.7 million. Limited volatility in financial markets between April and June especially curbed revenue rises in the Xetra cash market and the equity and index derivatives business at Eurex. This wasn't offset by higher revenues at the Clearstream settlement and custody business, which benefited from higher net interest income due to rising U.S. interest rates.

Profits were also curbed by some EUR26 million spent for efficiency initiatives, litigation and expenses related to the failed merger with the London Stock Exchange. The merger plans were blocked by the European Commission, the European Union's antitrust arm, in March.

Deutsche Boerse will hold an analyst call at 1200 GMT Thursday.

Write to Ulrike Dauer at ulrike.dauer@wsj.com

(END) Dow Jones Newswires

July 26, 2017 14:27 ET (18:27 GMT)