BlackRock Profit Falls, But Beats Analysts Estimates

BlackRock Profit Falls, But Beats Analysts Estimates

BlackRock, Inc. (NYSE:BLK), the world’s biggest money management firm, reported a 3 percent decline in its profits for the second quarter. The company reported earnings of $558 million, excluding some one-time charges.  It’s per share revenue of $3.10, which is up from $3.00 a year ago, beats the average analyst’s estimate of $3.02 a share, according to Standard & Poor’s Capital IQ. Including those one-time charges, BlackRock, Inc. (NYSE:BLK) earned $554 million, which is 11 percent lower than the same period last year.

“Our second quarter 2012 financial performance again demonstrated the strength and resilience of BlackRock’s diversified platform, and our commitment to delivering for shareholders,” Laurence D. Fink, BlackRock’s chairman and chief executive, said in a statement. “Despite market headwinds, and the growing defensive posture of investors, we delivered consistent results quarter-over-quarter.”

BlackRock, Inc. (NYSE:BLK) results reflected the overall macro-economic scenario, with stock markets declining all over due to worries about the European debt crisis, and a slowdown in Asia. Investors are acting bearish with Standard & Poor’s 500 index falling by 3.3 percent. Investors overall, withdrew $7.7 billion from U.S. stock funds in June.

Asset Management firm reported a 3 percent decline in its assets under management to $3.56 trillion for the quarter, along with an 18 percent fall in performance fees. However, an encouraging sign was that it was able to draw $3.7 billion worth of new business from fixed-income offerings. Another piece of positive news was from its advisory arm, which includes its Solutions business that is currently helping Federal Reserve Bank of New York to complete its bailout-related efforts. The advisory arm reported a 13 percent rise in revenue, to $131 million. During the quarter, BlackRock, Inc. (NYSE:BLK) also worked to wind-down two special financial vehicles, which were created as part of the government rescues of Bear Stearns and the American International Group.

Some of its competitors who reported their earnings first quarter earnings were Apollo Global Management LLC (NYSE:APO), who posted better than expected results, with a 23% rise in first quarter earnings, driven by increase in management fees and robust growth in investments. Also, US buyout group KKR, reported a drop in its economic net income to $727.2m for the first quarter, despite a 9 per cent rise in the value of its private equity holdings.

“As we look toward the second half of the year, I want to acknowledge the tireless efforts of the entire BlackRock team, and the great work they do to serve their clients and deliver value for our shareholders,” said CEO Larry Fink. “While we remain cautious around the prospects for the global economy, we are confident that the model we have built will continue to serve our clients and shareholders, and deliver attractive long-term returns.”

About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at