Deutsche Brse Group released its first quarter 2010 result. Sales revenue increased by 3% to 519.2 million over the previous quarter (Q4/2009) despite continued reluctance of market participants. Total costs for the first quarter 2010 stood at 298.8 million. Adjusted for restructuring expenses of 27.8 million relating to measures to increase the operating efficiency, which were announced in February 2010, costs were below the 2009 level. Earnings before interest and tax (EBIT) amounted to 245.6 million. Adjusted for restructuring expenses, EBIT stood at 273.4 million, a considerable increase over previous quarters.
Gregor Pottmeyer, CFO of Deutsche Brse AG, said, In the first quarter 2010 we achieved an increase of sales revenue over the previous quarters. The implementation of the efficiency measures we communicated in the first quarter is on track. The company is thus well positioned to benefit from a further recovery of financial markets.
Sales revenue of Deutsche Brse Group stood at 519.2 million in the first quarter of 2010. This corresponds to a decrease of 4% compared to the same quarter of the previous year (Q1/2009: 539.8 million) and an increase of 3% compared to the previous quarter (Q4/2009: 505.4 million). The year-over-year decrease in sales revenue is largely due to uncertainties on the markets in the first quarter 2009 as a result of the financial crisis andthe considerably higher equity volatility this has caused. The quarter-on-quarter rise in sales revenue is due to a partial recovery in market activity; however the market environment overall continues to be characterized by reluctance of market participants.
In addition to sales revenue, the Group generated a further 11.0 million in net interest income from banking business, 66% less than in the same quarter in the previous year and 38% less than the previous quarter (Q1/2009: 31.9 million, Q4/2009: 17.7 million). The decline is the result of the persistent drop in short-term interest rates, which have fallen to newhistoric lows, the expiry of interest rate hedges, and term investments reaching maturity.Since 1 January 2010 own expenses capitalized are no longer reported as a separate revenue line item on the consolidated income statement.
Furthermore, expenses incurred in connection with internal development activities compriseonly non-capitalized amounts. This change results in a decrease of both total revenue and cost by around 40 million in 2010 and thus does not impact earnings. This change also harmonizes the effects of acquired and internally developed intangible assets on the consolidated income statement. The prior period figures were adjusted accordingly.
Total costs of 298.8 million were slightly above the level of the first quarter of the previous year (Q1/2009: 288.5 million), but included 27.8 million restructuring expenses relating to the measures to increase operating efficiency announced in February 2010. Adjusted for this effect, costs amounted to 271.0 million and were thus below both the level for the same quarterof the previous year as well as for the previous quarter. Concerning costs, the company distinguishes between volume related and operating costs since the first quarter 2010. Volume related costs stood at 54.0 million and operating costs at 244.8 million during the reporting period. Operating costs excluding restructuring expenses stood at 217.0 million.
The result from equity investments at 1.7 million was below that of 2009. In 2009, the result from equity investments still included the contribution of Stoxx Ltd. Since the full consolidation as at 31 December 2009, the Stoxx contribution to sales revenue and cost has been included in the Market Data & Analytics segment. The contribution from Scoach Holding is included in theresult from equity investments since the deconsolidation of the Scoach subgroup as at 31 December 2009. Overall, Deutsche Brse Group achieved EBIT of 245.6 million, a decline of21% over the same quarter of the previous year (Q1/2009: 311.6 million).
Adjusted for restructuring expenses, EBIT stood at 273.4 million, which is a considerable increase over previous quarters. The net financial result for the first quarter 2010 was −22.9 million, reflecting in particular interest payments in connection with the ISE financingconcluded in 2008. The interest coverage ratio, adjusted for restructuring expenses, stood at 16.6 for the first quarter 2010. The Groups effective tax rate was 27.0% in the first quarter 2010 and thus at the same level as 2009. The improvement in the group tax rate since the second half of 2008 reflects the relocation of staff to Eschborn. Non-controlling interests, through which profit and losses of subsidiaries are shared with minority shareholders, of −5.7 million stood at the level of Q1 2009.
Net income for the first quarter 2010 was 156.9 million, compared to 205.9 million in Q1 2009, a decline of 24%. Adjusted for restructuring expenses, net income amounted to 177.2 million. Basic earnings per share declined in the first quarter of 2010, based on the weighted average of 185.9 million outstanding shares, by 24% to 0.84 (Q1/2009: 1.11 with 185.8 million outstanding shares). Adjusted for restructuring expenses, basic earnings per share were 0.95. The basic operating cash flow for the Group stood at 1.62 per share, confirming the continued high earnings power of the Group.
D.C.