February 19, 2018 / 7:19 AM / a month ago

UPDATE 2-Euronext looks for deals as profit beats expectations

* FY EBITDA 297.8 mln euros vs forecast 292.75 mln

* CEO signals a return of volatility

* Looking for more deals after Irish exchange purchase (Adds details, CEO comments)

By Noor Zainab Hussain

Feb 19 (Reuters) - Euronext is looking to buy more European exchanges following last year’s purchase of the Irish Stock Exchange (ISE), it said on Monday, as it strives to turn up the heat on bigger rivals Deutsche Boerse and the London Stock Exchange.

The pan-European exchange, which already operates bourses in Paris, Amsterdam, Brussels, London and Lisbon, also beat full-year core earnings forecasts, and said it should benefit from a pick up in market volatility and an improving global economy.

“We include for the first time since our IPO a new exchange (ISE) and send a clear message to independent exchanges in Europe willing to benefit from our single liquidity pool and propriety technology platform,” CEO Stephane Boujnah said on a media and analyst call after the results.

Euronext bought ISE for 137 million euros ($170 million) last year to boost its position in debt and fund listings, and step up competition to the London Stock Exchange Group and Deutsche Boerse.

Tight cost control and rising volumes helped Euronext to cope with relatively calm markets last year, compared with 2016 when the U.S. presidential election and Britain’s vote to leave the European Union boosted volatility.

Volatility is an important driver of trading across a range of asset classes, including futures, exchange-traded funds and cash equities.

“Our confidence is strong for the next two years. Core business revenue should grow in line with forecasts, and we will continue our cost control discipline...,” Boujnah said.

He added volumes in 2018 had been “very strong”, with the return of volatility and a pick up in many European economies.

Cash trading volumes were up 32.5 percent so far this year on the same period a year ago, with derivatives trading up 28.7 percent.

“Euro zone growth prospects have been revised upward at 2.3-2.4 percent in 2018 which is cyclically strong and likely going to support equity inflows into our market,” Boujnah said.

Euronext said it would keep a target to pay out 50 percent of its earnings as dividends, while also looking for deals.

Its acquisition plans include looking to further consolidate Europe’s cash equities market and diversifying revenue streams.

“The ISE decided to go this way at the end of last year and we are open to other European exchanges who want to follow the same ambition,” Boujnah said.

While Boujnah did not name exchanges Euronext could target, analysts have pointed to the Spanish stock exchange.

$1 = 0.8056 euros Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Mark Potter

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