As the battle for energy trading supremacy continues to heat up, both Nymex Holdings Inc., the holding company of the New York Mercantile Exchange (Nymex), and Atlanta, GA-based IntercontinentalExchange (ICE) both reported strong earnings increases over 2004. The head-to-head competition for energy trading market share has increased over the past year (see NGI, Feb. 20).
Nymex's 2005 net income rose 160% over 2004 levels. The company reported that its 2005 net income was $71.1 million, compared to 2004's $27.4 million.
ICE, which reported earnings in late February, posted a consolidated net income increase -- excluding nonrecurring items -- of 53.1 million, a 141.9% increase over the $21.9 million in 2004. Including the nonrecurring floor closure costs and the settlement costs incurred in the second quarter of 2005, net of tax, the ICE income increase was 84.1% to a record $40.4 million.
ICE launched its successful initial public offering (IPO) in Nov. 2005 (see NGI, Nov. 21, 2005). ICE's share price -- initially $18-20 -- has been steadily climbing this year, recently trading above $60. Following the investment from General Atlantic LLC, Nymex has said it would like to launch an IPO sometime this year (see related story).
Nymex said earnings per share in 2005 were $87,167, a steep increase over 2004's $33,538. Total revenue increased to $346.6 million in 2005 from $241.3 million during the prior year.
Due to redeemable stock put adjustments required under U.S. Generally Accepted Accounting Principles, ICE posted diluted earnings per share for 2005 of ($0.39) compared to $0.41 in 2004. Excluding the impact of the redeemable stock put adjustments to retained earnings in 2005, ICE's adjusted diluted earnings per share for 2005 was $0.74.
ICE reported a 43.8% rise in consolidated revenues to a record $155.9 million compared with $108.4 million in the prior year. ICE attributed its growth in revenues and net income to record volume in the futures business segment and a 79.6% increase in average daily commissions in the over-the-counter (OTC) business segment.
Nymex also reported that clearing and transaction fees increased 44% to $277.6 million in 2005 due primarily to increased trading and clearing volume. Operating expenses totaled $215.6 million in 2005 compared with $193.7 million in 2004, primarily due to higher general and administrative expenses driven in large part by the exchange's international initiatives. Nymex paid total dividends of $108,701 per share during 2005.
For ICE, consolidated transaction fee revenues increased 50.7% to $137 million in 2005, from $90.9 million in 2004. OTC transaction fee revenues increased 75.7% to $79.8 million in 2005, and futures transaction fee revenues increased 25.7% to $57.2 million in 2005. For the year, average daily commissions in the over the counter (OTC) business segment were $311,576...a 79.6% increase over $173,506 in the prior year.
During 2005, Nymex recorded a record 215.2 million contracts in total futures and options trading and clearing volume, a 27% increase over the 169.5 million contracts traded and cleared in 2004. Included in this total was volume submitted for clearing through Nymex ClearPort of 39.3 million contracts, a 175% increase from the 14.3 million in 2004.
Total energy futures traded reached 112.3 million contracts, topping the 2004 record of 96.9 million contracts. Crude oil futures reached 59.7 million contracts in 2005, surpassing the record 52.9 million contracts traded in 2004. Crude oil options set a record with 14.7 million contracts, surpassing the record 11.5 million contracts traded in 2004.
The exchange said Nymex miNYTM futures volume grew by 624% with 6.2 million contracts traded in 2005, compared to the 856,544 contracts traded in 2004. This total includes a record 5.7 million Nymex miNYTM crude oil futures contracts, which shattered the 2004 record of 720,421 contracts, and a record 522,439 Nymex miNYTM natural gas futures contracts, which surpassed the 2004 record of 136,123 contracts.
"In 2005, Nymex experienced its fourth consecutive year of record volumes while continuing its international expansion efforts," said James E. Newsome, president of Nymex. "We are very pleased with the growth in both the energy and metals complexes and the continued confidence futures industry participants place in our markets."
Volume at ICE Futures for 2005 was a record 42.1 million contracts, up 18.3% over 2004. Average daily volume in the futures business segment for 2005 was 166,225 contracts, compared to 139,924 contracts in 2004. For the period following the closure of the open-outcry trading floor, April through December 2005, average daily volume increased 23.6% to 173,518 contracts over the same period in 2004 when average daily volume was 140,348 contracts.
"We executed on our growth plans by successfully extending electronic trading to energy futures during 2005 and building on our rapidly growing OTC business," said ICE CEO Jeffrey C. Sprecher. "In the fourth quarter, we completed a number of significant achievements that capped off a strong year. We completed our initial public offering, demonstrated substantial volume growth in our futures and OTC businesses and integrated the services we provide under the ICE brand. These efforts have enabled us to grow by attracting a broad base of global market participants who rely on ICE's accessible energy markets for risk management."
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