Deutsche Börse 2015 Net Revenue up 16% YoY, Driven by Market Volatility

Deutsche Borse's double-digit growth in EUREX and Xetra segments was fueled by market volatility.

Deutsche Börse, the exchange operator and owner of numerous business lines under its group structure, today reported its preliminary 2015 results, which hit the upper end of its forecast range with 2.367 billion euros of net revenue. Included in its preliminary figures today were Q4 totals reported for 2015, showing net revenues higher by 16% or €320 million year over year (YoY).

The company’s CFO Gregor Pottmeyers highlighted growth expectations for 2016: “Given the improved market environment and structural growth, we anticipate organic net revenue growth of 5 to 10 per cent for 2016. So far the start to the year has been encouraging. The active approach to managing operating costs which we introduced with the Accelerate programme will ensure the scalability of our business model. On this basis, we forecast earnings growth of between 10 and 15 per cent for the current fiscal year.”

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Operating costs rose to €1,375.6 million from €1,114.8 million YoY

On a consolidated basis, after adjusting for non-recurring income and expenses (effects) that increased operating costs – but that were within the group’s prior forecast range – and were related to mergers and efficiency programs, the total adjusted operating costs rose to €1,248.8 million from €1,068.8 million YoY. The non-recurring effects stood at €126.8 million in 2015, up from €46.0 million YoY.

Equity investments amounted to only €0.8 million, which when compared YoY is a 98.9% decline from €78.3 million in 2014. This drop is largely attributable to non-recurring income related to the merger of Direct Edge ECN LLC with BATS Global Markets, Inc. in January 2014. Adjusted for non-recurring effects, equity investments showed a figure of €5.4 million, still lower YoY from €8.6 million in 2014.

High 2015 revenues and volumes spilling into 2016 expectations of 10-15% growth

The company expects strong profit growth of 10-15% in 2016, amid market volatility that has already propelled global volumes throughout the trading spectrum so far this year.

Deutsche Börse stated that it has recovered from the last financial crisis, as its net revenue figures have surpassed the pre-crisis watermark.

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The company’s executive board proposed an increase in its dividend – pending supervisory board and shareholder approval in May – to 2.25 EUR per share, representing a ratio of 55% of its adjusted net income in 2015. Basic earnings per share (EPS) rose to €4.14 from €3.63 in 2014, a rise of 51 cents or 14% YoY.

Exchanges stock trading and commodity lines fueled by market volatility

The main contributors to the results included the Eurex and Xetra segments, which had double-digit growth rates, primarily due to higher volatility on equities and commodities markets. The market data and investment fund services segments also experienced high growth.

Adjusted EBIT figures rose nearly 13.8% to €1,124.0 million in 2015 from €987.6 million YoY, higher by €136.4 million.

Despite the 16% YoY growth in revenue from €2.047.8 million, the company cited higher adjusted operating costs due to exchange rate effects and consolidation, including higher remuneration tied to and reflecting higher share price performance.

The effects related to consolidation included net revenue of €123.3 million, mostly driven by Clearstream Global Securities Services, Powernext, APX, and 360T. Adjusted for these effects, net revenue increased by 10 per cent, according to the report.

Deutsche Börse AG CEO Carsten Kengeter commented regarding the launch of Accelerate last summer: “We have already seen encouraging initial success in implementing the Accelerate growth programme. We are accelerating the Group’s growth momentum through numerous new initiatives. Our clear long-term vision is to turn Deutsche Börse into the market infrastructure provider of choice, being top-ranked in all its activities.”

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