Exchange operator CME Group Inc. said its fourth-quarter net income more than tripled, helped by a one-time tax benefit that offset a $30 million loss related to the collapse of trading firm MF Global.
The company also plans to pay more in dividends and announced a $100 million fund intended to protect the money of U.S. farmers and ranchers who use the exchange to hedge their business. The company said it is starting the safety net fund after the MF Global failure.
MF Global's Oct. 31 collapse threw commodity markets into disarray and left hundreds of customers confused and angry because their money was missing. Much of the missing $1.2 billion belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from the fluctuating prices of commodities such as corn and wheat.
The fund will be in effect starting in March, and will not affect farmers and ranchers hurt by MF Global's collapse.
The Chicago exchange, where options and futures based on interest rates, currencies, commodities and other assets are traded, said on Thursday that its net income during the quarter ended Dec. 31 was $745.9 million, or $11.25 per share, compared with $196.2 million, or $2.93 per share, during the same period a year before.
Profit got a boost from a $528 million non-cash benefit from a tax adjustment. Stripping out that and the loss related to MF Global's collapse, adjusted net income during the quarter was $3.55 per share. Analysts expected earnings of $3.71 per share, according to FactSet.
Revenue fell 3.5 percent to $736.5 million from $763.2 million, as average trading volumes dropped 2 percent and revenue from clearing and transaction fees fell 4 percent. Analysts expected $746.3 million.
Trading has been more subdued recently in the wake of high volatility in the summer and fall of 2011.
But shares rose $11.02, or 4.5 percent, to $256.50 in afternoon trading after CME said that it was raising its first-quarter dividend 59 percent to $2.23 per share. It now plans to pay out 50 percent of the prior year's earnings rather than 35 percent. The company also said it will start an additional annual dividend that will be determined based on the state of the business. It will be $3 per share in 2012.
For all of 2011, CME Group reported net income of $1.81 billion, or $27.15 per share, compared with $951.4 million, or $14.31 per share, the year before. Revenue rose 9 percent to $3.28 billion from $3 billion.