Deutsche Börse AG posts solid earnings growth for 2017

Deutsche Börse volumes

Deutsche Börse AG published its preliminary results for the fourth quarter and full year 2017 on Tuesday. The highlights include:

  • Net revenue 2017 up 3 per cent, to €2,462 million
  • Adjusted operating costs declined by 1 per cent
  • Adjusted EBITDA and net income up 6 per cent
  • €4.59 adjusted earnings per share
  • Proposed dividend increase, to €2.45 per share (+4 per cent)
  • For 2018 structural net revenue growth of at least 5 per cent and net income growth of at least 10 per cent expected

The company generated net revenue of €2,462.3 million in the full year, a 3 per cent increase compared to the previous year (2016: €2,388.7 million). As part of that, Deutsche Börse achieved structural net revenue growth of approximately 5 per cent, in line with its planning. Conversely, cyclical decreases amounted to approximately 2 per cent, mainly in equity index derivatives.

Adjusted operating costs of €1,039.5 million were slightly lower year-on-year (2016: €1,048.7), in spite of various inflationary effects – largely due to ongoing improvements of operating efficiency. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) stood at €1,431.1 million, up 6 per cent on the previous year (2016: €1,345.7 million).

Adjusted net profit for the period attributable to Deutsche Börse AG shareholders (hereinafter “net income”) also rose by 6 per cent, to €857.1 million (2016: €810.8 million). Basic earnings per share, adjusted for non-recurring effects, amounted to €4.59 (2016: €4.34).

The Executive Board of Deutsche Börse AG proposes to increase dividends for the 2017 financial year by 4 per cent, to €2.45 per share (2016: €2.35 per share). The dividend proposal is equivalent to a distribution ratio of 53 per cent of the adjusted net income, and thus within the range set by Deutsche Börse Group’s dividend policy. The dividend proposal still requires formal approval by the Supervisory Board of Deutsche Börse AG (which has already expressed its support), and by Deutsche Börse AG’s shareholders, at the Annual General Meeting on 16 May 2018.

Gregor Pottmeyer, CFO of Deutsche Börse AG, noted:

We were able to increase net revenue from our structural growth initiatives by 5 per cent, as planned. However, as already indicated last year, due to negative cyclical effects, we did not quite achieve our growth targets for the full year.

Theodor Weimer

Theodor Weimer, CEO of Deutsche Börse AG, said:

For the current year, we plan for further structural net revenue growth of at least 5 per cent. Moreover, we do not expect any further overall cyclical headwinds. In addition, our efficient cost management will ensure the scalability of our business model so that we expect at least 10 per cent net income growth for 2018.

Preliminary results for Q4/2017

Net revenue for the fourth quarter of 2017 increased compared to the same quarter of the previous year, by 3 per cent to €639.0 million (Q4/2016: €619.0 million). The weaker market environment for the Eurex segment was offset, in particular, by the strong performance of the Clearstream segment during the quarter, plus slight growth in the Xetra and Market Data + Services (MD+S) segments. Net interest income from banking business rose markedly, to €37.1 million (Q4/2016: €22.0 million), largely reflecting the higher interest rate levels in the US.

At €323.3 million, operating costs were down year-on-year (Q4/2016: €348.2 million). Factors contributing to the decrease included higher non-recurring effects during the previous year’s period, but structural efficiency measures as well. During the fourth quarter of 2017, non-recurring effects totaled €21.7 million (Q4/2016: €38.7 million), largely comprising costs for the integration of subsidiaries, litigation costs, as well as restructuring charges. Adjusted for these non-recurring effects, costs declined by 3 per cent year-on-year, to €301.6 million (Q4/2016: €309.5 million).

The result from equity investments for the fourth quarter amounted to €74.4 million (Q4/2016: €37.5 million), largely reflecting the sale of shares in ICE US Holding Company L.P. Adjusted for this non-recurring effect, the result from equity investments stood at €0.9 million (2016: €0.2 million).
Deutsche Börse Group’s EBITDA was €390.1 million for the quarter under review (Q4/2016: €308.3 million). Excluding the non-recurring effects set out above, consolidated EBITDA amounted to €338.3 million, a 9 per cent increase compared to the previous year’s figure (Q4/2016: €309.7 million).

The Group’s adjusted financial result was €–19.9 million (Q4/2016: €–19.2 million). The Group’s adjusted effective tax rate of 27.1 per cent for the fourth quarter of 2017 was in line with expectations (Q4/2016: 27.2 per cent). Accordingly, net income totaled €213.6 million (Q4/2016: €170.0 million); excluding the non-recurring effects described above, it was €194.0 million (Q4/2016: €180.3 million).

Basic earnings per share were €1.15 in the fourth quarter (Q4/2016: €0.91). Adjusted for non-recurring effects, basic earnings per share stood at €1.04 (Q4/2016: €0.97) – an increase of 7 per cent.

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