CME Group Inc.
) reported fourth-quarter 2012 operating earnings per share of 63
cents. The result was in line with the Zacks Consensus Estimate
but significantly lagged the year-ago quarter's earnings of 71
Operating net income dipped 10.7% year over year to $210.3
million. This excluded tax benefit worth $43.5 million associated
with revaluations in deferred income tax liabilities. Income tax
adjustments, related to MF Global's bankruptcy, were also
recorded in the year-ago quarter. Including these adjustments,
the quarterly GAAP net income was $166.8 million or 50 cents per
share as compared with $745.9 million or $2.25 per share in the
CME Group's total revenue for the reported quarter declined
10.3% year over year to $660.9 million. It also fell short of the
Zacks Consensus Estimate of $662 million. The significant drop
was primarily due to a decline in clearing and transaction fees
as a result of poor average daily volumes across interest rates,
equities, foreign exchange, energy and metals asset classes. Even
revenue from market data and information services witnessed
deterioration. These were marginally offset by stable average
rate per contract.
CME Group's average daily volume plummeted 13% year over year
to 10.2 million contracts in the reported quarter. However, total
average rate per contract climbed 2% from the year-ago quarter to
83 cents. The volumes constituted mostly of lower-priced products
across asset-class that require higher volume discounts.
clearing and transaction fees
decreased 9.1% year over year to $544.6 million, while accounting
for about 84% of the total revenue. Additionally, revenue from
and information services
decelerated 25.0% year over year to $79.3 million. However,
revenue earned from
access and communication fee
surged 61.8% year over year to $23.3 million, while
revenue plunged 20.3% year over year to $13.7 million.
However, total operating expenses declined 17.6% year over
year to $285.3 million. Excluding an expense of $27 million
related to MF Global's bankruptcy in the year-ago quarter,
operating expenses declined 10% year over year. Operating income
fell 3.8% year over year to $375.6 million, although operating
margin improved to 56.8 % from 53.0% in the year-ago quarter.
Meanwhile, CME Group recorded a non-operating expense of $22.1
million against $20.7 million in the year-ago quarter, primarily
owing to higher interest and borrowing costs.
Highlights of Full-Year 2012
For full-year 2012, CME Group reported operating earnings of
$3.02 per share, which missed the Zacks Consensus Estimate of
$3.03 marginally but significantly lagged $3.41 per share in
2011.Reported net income stood at $896.3 million or $2.70 per
share in 2012 against $1.81 billion or $5.43 per share recorded
Total revenue plummeted 11.2% year over year to $2.91 billion
in 2012, which lagged the Zacks Consensus Estimate of $2.92
billion as well. Total operating expenses dipped 2.9% year over
year to $1.22 billion, well within management's target of below
As of Dec 31, 2012, CME Group had $1.66 billion of cash and
marketable securities, higher than $1.09 billion at 2011-end,
while long-term debt stood at $2.106 billion, in line with the
As of Dec 31, 2012, CME Group had total assets of $38.86
billion (down from $40.76 billion as of Dec 31, 2011), while
total shareholders' equity stood at $21.42 billion (down from
$21.55 billion as of Dec 31, 2011). The company did not
repurchase shares during the reported quarter.
Management projects expense to grow to about $1.25 billion in
2013, primarily due to an increase in hiring for new technology
and regulatory requirements as well as for the initiation of
public relations campaigns for retaining market confidence. This
indicates that the company still aims to maintain expense growth
of below 5%, as anticipated earlier.
On Jan 30, 2013, the board of CME Group declared a regular
first-quarter dividend of 45 cents per share, which will be paid
on Mar 25, 2013 to shareholders of record Mar 8, 2013.
On Dec 28, 2012, CME Group paid a semi-variable dividend of
$1.30 per share to shareholders of record Dec 17, 2012.
On Dec 26, 2012, the company paid a regular fourth-quarter
dividend of 45 cents per share, to shareholders of record as on
Dec 10, 2012. The dividend reflects the effect of 5-for-1 stock
split of its common stock, effective since Jul 20, 2012.
Overall, CME Group paid $1.2 billion in dividends in 2012, of
which $581 million was paid in the reported quarter.
CME Group carries a Zacks Rank #3 (Hold). Other strong
performers in the financial sector include
Euronet Worlwide Inc.
), all of which carry a Zacks Rank #1 (Strong Buy).
CME GROUP INC (CME): Free Stock Analysis
EURONET WORLDWD (EEFT): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
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