Lazard Revenue Rises as Assets Under Management Climb -- Update
28 October 2016 - 4:52AM
Dow Jones News
By Austen Hufford and Liz Hoffman
Lazard Ltd. said its third-quarter revenue rose amid gains in
its financial advisory and asset-management businesses, while its
profit declined on higher costs.
Financial advisory revenue grew 3.8% from last year to $343.5
million. Revenue in its deal-making advisory business fell 2% from
a year earlier but rose 38% from last quarter to $281.6 million as
several large deals were completed, among them Johnson Controls
Inc.'s takeover of Tyco International PLC, a Lazard client.
"The M&A market has been good and in the U.S. really livened
up over the past few weeks," Lazard Chief Executive Ken Jacobs said
in an interview. "Companies are still looking for top-line growth"
as economic growth remains muted.
On the asset management side, revenue 1.3% from a year earlier
as assets under management as of Sept. 30 grew 12.5% to $205.44
billion, with net inflows of $2.8 billion.
That makes Lazard one of the few large active managers to see
continued large inflows. Investors have shifted billions of dollars
to passive strategies that mirror the performance of indexes.
Some of Lazard's strategies, such as those focused on emerging
markets or bespoke industries like robotics, are tough to replicate
in an index, Mr. Jacobs said. That makes them less vulnerable to
being replaced by passive managers -- though competition is coming,
from startups like Motif Investing Inc., which allows users to
assemble portfolios based on themes.
In Lazard's smaller restructuring business, revenue was $51
million in the quarter, up from $26 million last year but down from
$72.3 million last quarter. With low energy prices, a number of
energy companies have filed for bankruptcy in recent years,
boosting Lazard's restructuring business.
In all for the period, Lazard reported a profit of $112.5
million, or 85 cents a share, down from $398.5 million, or $2.99 a
share, a year earlier. Last year's result included a $259 million
gain related to a tax receivable agreement.
Net revenue grew 6.2% to $608.9 million.
Analysts polled by Thomson Reuters expected 77 cents in
per-share profit and $589.8 million in revenue.
An adjusted figure for compensation expenses rose 4% from the
year prior.
Shares rose 1% but remain down 18% for the year, among the worst
performers in the financial sector.
Write to Austen Hufford at austen.hufford@wsj.com and Liz
Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
October 27, 2016 13:37 ET (17:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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