Carlyle Group LP (CG) Q3 Profit Falls 11 Percent

Carlyle Group LP (CG) Q3 Profit Falls 11 Percent
By The Carlyle Group (annual report),User:Fairlyoddparents1234 (uploaded result) [Public domain], <a href="">via Wikimedia Commons</a>

Carlyle Group LP (NASDAQ:CG) reported lower than expected third quarter profits on Wednesday. The private equity firm said its economic net income, which includes unrealized gains, fell 11% to $195 million. However, revenues rose 3.4% to $888.1 million, well above the consensus estimate of $616 million. Post-tax profits stood at $160.2 million or 51 cents a share, falling short of Wall Street’s estimate of 60 cents.

Carlyle Group LP (CG) Q3 Profit Falls 11 Percent

Carlyle Group raises $6.5B in new capital

Private equity firms measure their profit in terms of economic net income. But using GAAP principles, Carlyle Group LP (NASDAQ:CG) earned only $2.3 million for the quarter ending September 30, down 88% from $18.6 million last year. During the quarter, Carlyle Group LP (NASDAQ:CG) sold out $3 billion of investments, and invested $1.9 billion in new deals. The firm’s pre-tax distributable earnings fell from $207 million to $105 million, the lowest since the company listed its shares on the Nasdaq in May 2012.

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The firm’s total AUM rose from $180.4 billion to $185 billion at the end of the third quarter. The company raised a whopping $6.5 billion in new capital during the quarter as it attracted new investors and secured commitments from existing ones. Carlyle Group LP (NASDAQ:CG) said it has $51.1 billion available for deals. That includes $9.1 billion in real estate and energy, and $22.8 billion in private equity.

Expenses hurt Carlyle Group

Its earnings were hampered by rising expenses. The company reported a 16% increase in its expenses, as compensation and related costs surged 12% from the previous year. Carlyle Group LP (NASDAQ:CG)’s performance fees slipped to $320.5 million. But its fund management fees were up 7.5% during the quarter to $257.9 million. The company also announced a Q3 dividend of 16 cents a share.

Carlyle Group LP (NASDAQ:CG) clearly failed to take advantage of favorable market conditions to exit investments. Its competitors The Blackstone Group L.P. (NYSE:BX) and KKR & Co. L.P. (NYSE:KKR) took advantage of the opportunity and reported much higher earnings.

Carlyle Group LP (NASDAQ:CG) shares were up 0.10% to $30.16 at 10:20 AM EDT. The stock has gained 16% this year so far.

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