BM&FBovespa Quarterly Profit Rises 14% as Job Cuts Lower Costs

By Alexander Ragir and Flavia Bohone
Aug. 12 (Bloomberg) -- BM&FBovespa SA, Latin America’s largest exchange, increased second-quarter profit by 14 percent as job cuts reduced costs and trading began to rebound amid Brazil’s equity rally.
Net income rose to 188.1 million reais ($101.7 million), or 0.09 centavos a share, from 165.2 million reais, or 0.08 centavos a share, a year earlier, the Sao Paulo-based company said yesterday in a statement to Brazil’s securities regulator. The results are based on pro-forma calculations.
BM&FBovespa was formed last year by the merger of Bolsa de Mercadorias & Futuros-BM&F SA and Bovespa Holding SA, the country’s derivatives and stock exchanges. Since its August 2008 combination, the company eliminated about 300 jobs, or 25 percent of its workforce, according to the exchange.
“They had cost-cutting synergies, mostly because of the job cuts,” said Aloisio Lemos, a Rio de Janeiro-based analyst with Agora Corretora, Brazil’s second-biggest brokerage, in an interview before the results were released. “There’s been a recovery in revenue from the beginning of the year because of rising financial trading volumes.”
Earnings excluding some items rose to 325.4 million reais from 246.3 million reais a year earlier. That beat the 302 million reais average of nine estimates compiled by Bloomberg.
Agora Corretora’s Lemos estimated a profit of 275 million reais for the second quarter.
Net revenue fell 15 percent from a year earlier to 378.2 million reais. The average value traded in the equity market fell to 5.2 billion reais from 6.5 billion reais a year earlier, according to the company’s statement.
Bovespa Trading
The average value traded on the Bovespa exchange rose from 3.9 billion reais in the first quarter as equities rallied. The benchmark Bovespa stock index rose 26 percent in the second quarter, amid speculation the global recession is easing.
BM&FBovespa climbed 68 percent in the quarter and has more than doubled this year on prospects that trading will rise as the stock market recovers from its worst year on record. The benchmark index sank 41 percent in 2008.
International investors bought 8.77 billion reais more than they sold on the Bovespa stock exchange in the second quarter, according to the company’s Web site. Foreign inflows on the stock exchange reached 2.2 billion reais in July.
Of the 20 analysts who follow BM&FBovespa, 10 rate the stock a “buy”, nine have a “hold” recommendation and one rates it a “sell,” according to Bloomberg data.