Euronext sees earnings boost following Irish Stock Exchange deal

Euronext (EPA:ENX) posted a 26.4% rise in its core earnings, with its EBITDA hitting €87.8 million in its third quarter (Q3) 2018 results, up from €69.5 million in the same period a year ago.

The pan-European exchange attributed its earnings growth to cost synergies arising from its acquisition of the Irish Stock Exchange (now operating as Euronext Dublin).

Euronext recently signed an agreement with German exchange operate Deutsche Boerse (ETR:DB1) for the early termination of trading services it provided to the Irish Stock Exchange.

The agreement will contribute around half of the €8 million in cost synergies from its recent acquisition immediately, which were initially due in December 2021.

‘Euronext delivered in Q3 2018 strong results, driven by growth in all its business lines,’ Euronext CEO and Chairman Stéphane Boujnah said. ‘Euronext has kept a strong market share on its cash trading business, at 65.7%, along with an effective yield management.’

‘Since the beginning of the year, Euronext has diversified, consistently strengthened its position across all asset class traded, as well in non-trading activities, and delivered key milestones of our 2019 objectives for the core business,’ Boujnah said.

‘We are proud to announce that, within the scope of our Agility for Growth strategic plan, Euronext EBITDA margin over the last twelve months reached for the first time, and one year in advance, the 61% level of our 61 to 63% 2019 EBITDA margin target,’ she added.

Euronext sees higher listings activity

Euronext also saw its earnings supported by higher listing revenues of €27.8 million, up37.6%, driven by the consolidation of Euronext Dublin and incremental contribution from its corporate services business.

Primary equity issues activity was modest in Q3 2018, impacted by mixed market conditions, partially offset by an enhanced environment for SME deals with notably the listing of Roche Bobois on Euronext Paris.

During the third quarter of 2018, 7 new listings, exclusively SME deals, were completed, compared to 6 listings in the third quarter of 2017. This translated into €88 million raised in Q3 2018, a decrease from €276 million last year.

Activity on the secondary market remained moderate, with follow-on activity recording €6.0bn of secondary equity issues, compared to €16.6bn in Q3 2017, which was marked by record activity in secondary equity issues. In total, €227.5 billion in equity and debt were raised on Euronext’s markets in Q3 2018, compared to €131.9 billion in Q3 2017.

‘In addition, the continued focus on costs reduction allowed us to reach the 2019 target one year in advance, with €24 million of cost savings on the core business achieved vs. €22 million targeted, while incurring less than half of the expected restructuring costs,’ she added.