OMHEX, the company formed last year by the merger of Swedish transaction technology vendor and Stockholmsbörsen operator OM and the Helsinki Stock Exchange, is reporting a massive rise in pre-tax profits for the first quarter, fuelled by merged revenues and merger-related cost-cutting.
Profits after financial items were up to Skr270m compared to just Skr11m prior to the merger in Q1 2003. OMHEX's total revenue for the quarter increased to Skr907m, compared to Skr612m in the year ago period.
But for comparable units - excluding HEX which was consolidated in Q3 2003 and the derivatives business of OM London Exchange which was sold last June - adjusted revenue increased just two per cent. This was mainly due to increased trading revenue at OMHEX's exchange operations, as revenue from its OM Technology division actually decreased.
At the Hex Integrated Markets division, revenues rose to Skr463m, compared to Skr234m in Q1 2003. Equity trading on the company's exchanges rose 50%, while the average number of derivative contracts traded increased by 53%.
But adjusted revenues at OM Technology fell by 13% compared with Q1 2003. The vendor says the drop is mainly due to the divestment of operations and product phase-out. In a statement, OMHEX president and CEO Magnus Böcker says revenues at the division are exected to be even lower in Q2, mainly due to operations that have been divested.
Commenting on the results, Böcker says: "Rising share prices combined with higher turnover velocity have made the first quarter of 2004 one of the best quarters ever for our exchange operations."
But Böcker admits the revenue increase is mainly attributable to last year's merger: "Cost synergies related to the merger of OM and HEX are expected to have a continued effect during the latter part of 2004."