NZX cites market volatility for cautious earnings update

NZX has kept to its original 2022 earnings guidance. Photo / File

Stock exchange operator NZX said increased market volatility and a general tightening of financial conditions meant it would keep to its previously-advised operating earnings guidance of $33.5 million to $38.0m for the current year.

The company's earnings before interest, tax depreciation and amortisation came to $35.8m in the 2021 financial year.

NZX issued its first guidance for 2022 at February's results announcement.

"Normally at the annual shareholders' meeting we like to consider tightening the bottom of the earnings guidance range reflecting the first quarter results," chairman James Miller said.

"However, this year we believe there is reason to be conservative due to geopolitical issues, rising inflation, and rising yield curves, and a switch from growth to value causing markets to pause as they assess new information," he said.

Miller said the company continued to grow the scale of NZX's businesses and the synergies between them.

"The NZX board believes this will create a strong platform for future earnings growth," he said.

"Building these growth opportunities required investment, notably elevating technology costs to ensure our core capital markets' infrastructure meets investor and regulator expectations, and Smartshares and Wealth Technologies can efficiently scale revenue growth into earnings.

"The cost of this investment in supporting growth escalated during 2021 and the full effect would be felt in 2022, with earnings benefits progressively delivered from 2023," he said.

Chief executive Mark Peterson said it had been another significant year of progress for the group across all key areas - capital markets, Smartshares, wealth technologies and its operations and technology platforms.

Dairy had always been viewed as a growth opportunity and Peterson said NZX's recent proposal to purchase a 33 per cent cornerstone stake in Global Dairy Trade (GDT), would give the company greater input into auctioning component of the market.

"Combined with our partnership with (Singapore exchange) SGX to grow the dairy derivatives business, our dairy business is now much better positioned to reach its growth potential," he said.

NZX continued to build scale in its Smartshares and wealth technology businesses.

The company's recent $44m capital raise was used to fund the ASB Superannuation Master Trust acquisition and its stake in GDT.

Shares in NZX last traded at $1.42, having dropped by 32 per cent over the last 12 months.