Legal Fees Eat into London Metal Exchange Q1 Earnings

Author：Site  Source：Original Site  Click to rate：1247  Post time：2014-05-09

Tags: LME RESULTS,ALUMINIUM SHEET

LONDON, May 8 (Reuters) - The London Metal Exchange (LME) posted a drop in first-quarter underlying earnings, as income from higher volumes was eroded by legal fees and other costs.

Hong Kong Exchanges & Clearing (HKEx) <0388.HK>, which owns the LME, said earnings before interest, tax, depreciation and amortisation at its commodities unit - the LME - dropped 12 percent on the year to $161 million.

Revenues rose 7 percent to $315 million as average daily trading volumes increased. But operating expenses rose by $42 million, partly due to legal fees for U.S. class action lawsuits and a judicial review in Britain.

In March a London High Court judge quashed a key part of the LME's long-awaited plan to shorten the queues that users of aluminium can face to withdraw metal, which they have bought via the exchange, out of warehouses that the LME oversees.

The action was brought by Russian aluminium company Rusal. [ID:nL5N0MO2MT]

The LME is seeking permission to appeal against the court ruling.

The LME is also facing class actions alleging anti-competitive and monopolistic behaviour in the warehousing industry.

The lawsuits, brought by small aluminium manufacturers in the United States, accuse banks and traders of hoarding metal in LME warehouses, driving up the prices of industrial products from soft-drink cans to aeroplanes.

HKEx said on Thursday that of the 26 lawsuits filed against LME in the U.S. 24 had been consolidated into three complaints.

"The LME and HKEx management continue to take the view that the lawsuits are without merit and...will contest them vigorously," HKEx said.

The LME oversees warehouses where companies that buy metals such as aluminium or copper on its futures market can take delivery of quality-assured supplies if needed.

FROM METAL.COM