Costs related to its upcoming takeover and debt refinancing pushed net income at exchange operator NYSE Euronext down 75 percent in the fourth quarter of last year compared to a year earlier.
The owner of the New York Stock Exchange said Tuesday it earned $28 million in the last quarter of 2012, compared with $110 million in the fourth quarter of 2011.
The company partially blamed the drop on merger costs and write-offs necessary to clear the way for its $8 billion acquisition by Intercontinental Exchange, a deal announced in December. It also paid $24 million to refinance a portion of its outstanding debt.
Without these charges, it said its fourth-quarter earnings would have been $105 million, still down on $130 million it earned the year before.
Earnings for 2012 were down 29 percent at $462 million on falling trading volumes, largely related to the exceptional volatility that existed in markets in 2011. Revenues for the year fell 18 percent to $3.7 billion.
The company said its 2012 results suffered in comparison with the previous year but contended that was because 2011 was unusual given the prevailing concerns over Europe's debt crisis and the future of the euro. Amid the uncertainty, the number of trades skyrocketed — a bonus for the exchange operator.
Though an annual comparison is clouded by what occurred in 2011, NYSE Euronext does face long-term challenges.
Profit margins in cash equities broking have been on a downward trend for several years, as trading has become more technology-driven and commoditized. However, futures exchanges, like the Atlanta-based Intercontinental Exchange, or ICE, have been able to maintain their profits because contracts are written by exchanges and must be bought and sold in the same place. Stocks, on the other hand, can be bought and sold on any exchange.