Stockholm (IFN) Nordic stock exchange operator OMX AB, which last year acquired the Icelandic Stock Exchange, onThursday reported a 54% rise in fourth-quarter net profit boosted by a capital gain of 83 million Swedish kronor ($11.9 million) and higher trading revenue.
The Stockholm-based company said net profit for the quarter came in at 295 million Swedish kronor ($42.3 million), up from SEK192 million in the year-ago period. This beat analysts forecast of SEK284 million.
OMX said fourth-quarter pretax profit rose 33% to SEK339 million from SEK255 million in the year-ago period. This was below analysts forecast of SEK360 million.
Total revenue at the company came in at SEK1.03 billion, up from SEK847 million a year earlier. This beat analysts forecast of SEK988 million and was fueled by higher trading revenue, rising information sales and increased revenue in technology operations.
OMX said it will propose a dividend of SEK6.50 a share, comprising an ordinary dividend of SEK4.50 per share and an extra dividend of SEK2 per share.
"After several years of structural and change activities, OMX is now well-positioned in the global exchange industry, an industry characterized by strong structural growth," Chief Executive Magnus Boecker said in a statement.
In early trading, OMX shares were up SEK0.25, or 0.2% at SEK138.75 in an overall higher Stockholm market.
Johannes Thormann, an analyst at WestLB AG, who rates the share at buy with a SEK170 target, said OMX results were "overall more than satisfying," with "good top-line development and good net profit."
Daniel Djurberg, an analyst with Carnegie, who rates the share neutral, said that despite higher sales, OMX shows "lower margins than consensus had estimated," noting lower margins at OMX Nordic Marketplaces.
OMX said total operating expenses in the fourth quarter rose 18% to SEK674 million from SEK573 million in the year-ago period. This was primarily due to costs associated with the launch of the Nordic Exchange and increases in personnel costs due to high market activities, it said.
The Nordic Exchange, which was launched Oct. 2, involves the development of a pan-Nordic presentation model for shares, new indexes and harmonized listing requirements.
Thormann said OMX proposed ordinary dividend of SEK4.50 confirms the companys confidence and added that he expects the shares to move higher.
OMX said return on equity rose to 20% in 2006 from 12% in 2005.
OMX, which operates all of the bourses in the Nordic region apart from the Norwegian exchange, has over past years shown an urge to grow. It bought a 10% stake in Norwegian bourse owner Oslo Bors Holding ASA in October.
Market watchers have been speculating about the role that OMX could play in an eventual consolidation of the European stock exchanges.
The U.S.-based Nasdaq Stock Market Inc has made a bid to take over the London Stock Exchange PLC - which the LSE has rejected - while the NYSE Group Inc and pan-European exchange Euronext have agreed to merge their operations.
Deutsche Boerse AG, operator of the Frankfurt exchange, had also bid for Euronext but has withdrawn its offer. Some analysts have speculated that the German company and OMX could be future partners.
Following its expansion in the Nordic and Baltic markets, OMX has recently been looking at Eastern Europe for growth opportunities.
In December, OMX made a EUR4.2 million bid to acquire all of the issued shares of the Ljubljana Stock Exchange in Slovenia. The bid expired Jan. 22, at which point no owners had yet taken up a final position.
Icelandic Financial News (IFN) is available on Factiva, a joint venture between Reuters and Dow Jones Newswires, FT.COM, LexisNexis, Comtex, Gale and Thomson via the Nordic Business Report.