Sleeker NZX gains traction with profit lift, expects a strong second half

NZX chief executive Mark Peterson. Photo / NZ Herald.

NZX chief executive Mark Peterson says the slimmed down stock exchange operator is gaining traction.

The company earlier announced a 46 per cent lift in its net profit for the six months to June and reiterated its guidance of operating earnings in a range of between $28 million and $31m for 2019. That would compare with operating earnings of $28.1m in 2018.

The prior year's first half profit was weighed down by losses.

"We feel like we are gaining traction and there are very good proof points coming through in various areas of the business," Peterson told the Herald.

Total operating earnings of $14.4m in the first half were up 4.3 per cent over the same period a year earlier.

Peterson acknowledged there had been a dearth of new share issues to hit the market in recent times.

There was just one new equity IPO - Cannasouth - in the first half and Napier Port is due to list on the NZX next week.

"There is an area that we would like to fix and that's new equity IPOs, but when I look forward to the rest of the year, we feel positive about what's in front of us," he said.

"We feel good about what the second half might deliver for us," he said.

Although there was a 15.1 per cent increase in the number of trades on the NZX, the total value traded fell by 9.7 per cent or $18.4 billion, resulting in a 17.3 per cent fall in secondary markets revenue.

"The fall in the trading side was largely due to the fact that we had to reset the platform for that business - policy changes and pricing changes to align those with the way brokers want to trade these days," Peterson said. "That impacted earnings."

Peterson said the "reset" was designed to bring more liquidity on to the trading screens.

"We see this adjustment to trading as something that we had to do, and it's actually going to deliver some growth to us in the long term," Peterson said.

Elsewhere, NZX's dairy derivatives trading volume rose 27.5 per cent, making it the fastest-growing dairy derivatives market globally.

Peterson said the company was "a lot more focused" after last year selling Farmers Weekly and its Melbourne grain data business.

In May, NZX sold its research house, Fundsource.

All up, $7.7 billion of capital was raised across equity, debt and managed funds over the six months - up 73.5 per cent.

The debt side of the business performed well $2.5b worth of new debt was issued - up 52 per cent on last year.