Investment managers posted a strong first quarter Thursday, with
BlackRock Inc. (BLK) and Janus Capital Group Inc. (JNS) both
delivering better-than expected earnings, buoyed by better
performance and higher assets under management.
T. Rowe Price Group Inc.(TROW), whose results fell short of
analysts' expectations, nevertheless posted a 27% rise in first
quarter earnings.
BlackRock's profits rose 34%, driven by "strong investment
performance, robust new business in long-term products, increased
demand for BlackRock Solutions and continued expense discipline,"
the company said. BlackRock Solutions is the company's advisory
business.
Janus' first-quarter net profit jumped 21% as revenue increased
and managed assets rose due to market appreciation.
BlackRock Chairman and Chief Executive Laurence D. Fink said
clients have begun to "re-risk" by investing less in standard
equities and moving towards more volatile, alternative products.
The company, which is the world's biggest money-management firm by
assets and which was recently added to the Standard & Poor's
500 Index, said investors deployed an additional $2 billion in
BlackRock's alternative investments so far this year, to complement
investments in products like exchange-traded funds.
BlackRock posted a profit of $568 million, or $2.89 a share, up
from $423 million, or $2.17 a share, a year earlier. Excluding
transaction costs and other items, earnings rose to $2.96 a share
from $2.40.
Revenue increased 14% to $2.28 billion, including a 66% one-year
jump in performance fees.
Analysts surveyed by Thomson Reuters predicted earnings of $2.77
a share on revenue of $2.25 billion.
Assets under management rose to $3.648 trillion, up 8.5% from a
year earlier and 2.5% from the prior quarter. A $100 billion
increase in assets due to performance gains and an inflow of $34.7
billion in net new business in long-term products were partially
offset by $24.4 billion of outflows in cash management and $4.5
billion of distributions from advisory accounts, the company
said.
As of April 14, BlackRock's net new business pipeline totaled
$82.4 billion, including $60.7 billion in long-term products, the
company said.
In a conference call, Fink said BlackRock will launch an
aggressive campaign to build brand awareness worldwide, and will
build out its distribution network and manufacturing platform. He
expects the industry to go through a period of "crowding out."
Fink also noted Asian flows were "slower than we would like"
after the massive Japanese earthquake in mid-March, but the firm is
committed to building out Asia to take advantage of future
growth.
Japan's Mizuho Financial Group Inc. bought a 2% stake in
BlackRock in November last year for $500 million, in a deal that
allows BlackRock products to be marketed to Japanese individuals
and businesses through Mizuho.
In March, the company raised its quarterly dividend 38% to
$1.375 and said it expects to increase share buybacks during the
year as the strength of the company's earnings and free cash flow
allowed it sufficient resources to continue to reinvest in its
business, while further enhancing BlackRock's payout to
shareholders.
T. Rowe Price posted a profit of $194.6 million, or 72 cents a
share, up from $153 million, or 57 cents a share, a year earlier.
Net revenue increased 23% to $682.4 million.
Analysts surveyed by Thomson Reuters expected earnings of 75
cents a share on revenue of $687 million.
Operating margin rose to 45.6% from 42.9%.
Assets under management rose 5.8% to $509.9 billion compared
with the fourth quarter. Net inflows were $5.8 billion, compared
with $10.3 billion reported a year earlier and $6.9 billion in the
prior quarter.
CEO James A.C. Kennedy noted how markets were volatile during
the most recent period. "Market gains through mid-February and a
strong rally in the latter half of March sandwiched a significant
selloff in which unrest in North Africa and the Middle East, as
well as the unfolding tragedy in Japan, rattled world markets," he
said.
However, he said "improving sentiment has led investors to
largely shrug off recent geopolitical and economic
uncertainties."
In January, Kennedy touted the way the firm's investment
performance was attracting more assets from both new and existing
clients, and its assets under management again hit a new high in
the latest quarter.
Earlier this month, the company made a notable investment in
Facebook Inc., an example of how T. Rowe has been more aggressive
than other traditional investment companies in betting on hot
technology plays.
Janus posted a quarterly profit of $37.9 million, or 21 cents a
share, up from $31.3 million, or 17 cents a share, a year earlier.
The latest period included 3 cents a share in debt-retirement
charges while the prior-year result included a 12-cent net benefit
from items such as an insurance recovery and the sale of structured
investment vehicle securities. Revenue rose 7.5% to $265.4
million.
Analysts most recently forecast a profit of 20 cents a share on
$268 million in revenue.
The company also quintupled its annualized dividend to 20
cents.
Janus said Chief Financial Officer Greg Frost, who has been with
the firm since 1997, plans to leave about Aug. 1. He will be
succeeded by Bruce Koepfgen, who previously worked for insurer
Allianz SE's asset-management unit.
Janus has seen continued earnings growth of late as investment
fees and the pool of assets it manages have increased from
prior-year levels.
Assets under management ended the period at $173.5 billion, up
from $165.5 billion a year earlier and $169.5 billion in the prior
period. The increase reflected market appreciation, which was
offset by $2.7 billion in long-term net outflows.
The firm's mathematical equity and fundamental equity long-term
outflows were about $2.6 billion and $500 million, respectively.
Fixed income saw inflows of about $400 million.
- Amy Or, Dow Jones Newswires, +1 212 416 3142,
amy.or@dowjones.com
(Matt Jarzemsky contributed to this article.)
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