(Releads, adds share buyback, details, context)
By Tom Sims
FRANKFURT, April 26 Deutsche Boerse
delivered a sharp rise in net profit in the first quarter and
said it would buy back shares as it sought to appease
disgruntled investors following its failed merger attempt with
London Stock Exchange Group.
The German exchange operator, which was forced to ditch a
planned merger with LSE last month, also reaffirmed its outlook
of "double-digit earnings growth" for the full year, despite
merger costs that totalled 76.2 million euros ($83 million).
It said on Wednesday that net profit rose 39.5 percent to
286 million euros in the first quarter from a year earlier,
lifted by the sale of a stake in BATS Global Markets.
"Thanks to our diversified business model and effective cost
management we were able to compensate low equity market
volatility in the first quarter and report solid earnings
growth," Chief Financial Officer Gregor Pottmeyer said.
Pottmeyer said in a statement that Deutsche Boerse was "very
well positioned" to benefit from improving cyclical conditions.
The results come a month after European Union regulators
blocked a planned merger with LSE due to concerns over a
potential monopoly in the processing of bond trades.
The industry has been trying to consolidate for years amid
weaker trading volumes and shrinking margins, but regulatory
concerns, along with nationalist wrangling, have hindered many
In the wake of the failed merger, Deutsche Boerse has been
coming under increased pressure from shareholders, with
influential proxy adviser Glass Lewis recommending they vote
against ratifying the actions of the management and supervisory
board at its 2017 annual general meeting.
German companies typically ask their shareholders to approve
the actions of their boards over the previous years at the
annual shareholder meetings.
Glass Lewis said that shareholders may have concerns over
the failed merger with the LSE and a pending investigation into
CEO Carsten Kengeter over possible insider trading. Kengeter has
denied the allegations.
Deutsche Boerse said it planned to buy back shares totalling
around 200 million euros ($218 million) in the second half of
this year which it would fund from the proceeds generated from
its 2016 sale of International Securities Exchange to Nasdaq
for about 1 billion euros.
Those funds were initially earmarked for the merger with
LSE, which last month announced its own 200 million pound
($256.74 million) share buyback.
Stripping out the one-off effect of the sale of a stake in
BATS Global Markets to U.S. exchange CBOE for 68
million euros last month, Deutsche Boerse said adjusted net
profit rose 5 percent to 232.2 million euros, from 221.3 million
euros a year earlier.
($1 = 0.7790 pounds)
($1 = 0.9170 euros)
(Editing by Alexander Smith)