Lazard Profit Drops as Merger Advice, Asset Management Slip

  • CEO Jacobs says `hopefully we've seen the worst' of turmoil
  • Full-year operating revenue reached record as deals climbed

Lazard Ltd. said fourth-quarter profit fell 8.1 percent as currency fluctuations and market turmoil pushed asset-management and financial-advisory revenue lower. Shares of the company dropped as much as 6.4 percent.

Net income declined to $158 million, or $1.18 a share, from $172 million, or $1.29, a year earlier, Bermuda-based Lazard said Tuesday in a statement. Earnings adjusted for one-time items were 92 cents a share, compared with the 87-cent estimate of 11 analysts surveyed by Bloomberg.

Lazard, which derives about half its revenue from overseeing funds, said assets under management slipped 5 percent to $186 billion as of Dec. 31. The investment bank was also the No. 7 merger adviser last year as the volume of deals climbed to a record globally, according to data compiled by Bloomberg. That fueled the firm’s highest-ever operating revenue for that business.

“Asset management, it really is reflective of the lower AUM and turmoil in the markets more than anything else,” Chief Executive Officer Ken Jacobs said in an interview. “We’ve already seen some dramatic moves in currency and valuations. So hopefully we’ve seen the worst of that.”

Emerging Markets

More than a fifth of Lazard’s assets under management were allocated to emerging-markets equity as of the end of September, according to the firm’s website. The MSCI Emerging Markets Index has tumbled 22 percent in the past 12 months. Lazard, which dropped 20 percent this year through Monday, fell 6.2 percent to $33.83 at 1:28 p.m. in New York.

For the full year, Lazard had record operating revenue of $2.38 billion, and its highest-ever net income of $480 million, or $3.60 per share, on an adjusted basis.

Lazard advised on six of the 10 largest deals last year, Jacobs said. Just one of those transactions have been completed, he said. The firm worked with Anheuser-Busch InBev SA on its more than $100 billion agreement to buy SABMiller Plc and Royal Dutch Shell Plc’s on its deal to purchase BG Group Plc.

Operating revenue for financial advisory slipped 7.8 percent to $331 million in the fourth quarter, while asset-management fees declined 8.1 percent to $261 million.

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