Publicly owned asset management holding company Brookfield Asset Management, Inc. (BAM, BAM-A.TO) on Friday reported a decline in profit for the third quarter, as revenues dropped from last year. Nevertheless, net earnings and revenues for the quarter came in above Street estimates. The company's cash flow from operations for the quarter rose from last year, reflecting higher realization gains due to the partial monetization of power-generation facilities.
The Calgary, Alberta-based company's net income for the third quarter dropped to US$ 112 million or US$ 0.17 per share from US$ 171 million or US$ 0.27 per share in the same quarter last year. On average, four analysts polled by Thomson Reuters expected the company to earn US$ 0.14 per share for the quarter. Analysts' estimate typically exclude one-time charges and gains.
In the sequentially preceding quarter, Brookfield Asset Management's net income rose to US$ 147 million or US$ 0.24 per share from US$ 110 million or US$ 0.17 per share a year earlier.
Cash flow from operations for the recent third quarter rose to US$ 520 million or US$ 0.88 per share from US$ 355 million or US$ 0.58 per share last year, and included gains due to the partial monetization of power generation facilities.
Total revenues for the third quarter slid to US$ 3.00 billion from US$ 3.22 billion in the same quarter last year, but topped analysts' consensus revenue estimate of US$ 2.97 billion for the quarter.
Fees earned in the quarter rose to US$ 157 million from US$ 109 million. Revenues less direct operating costs from commercial properties were US$ 436 million, down from US$ 595 million a year ago, while from power generation, they increased to US$ 506 million from US$ 213 million last year.
Revenues less direct operating costs from development and other properties for the quarter climbed to US$ 85 million from US$ 62 million, whereas for specialty funds, they slipped to US$ 21 million from US$ 32 million a year ago. Investment and other income plunged to US$ 144 million from US$ 247 million in the same quarter last year. Infrastructure was US$ 9 million, compared to US$ 27 million last year.
For the preceding second quarter, Brookfield Asset Management reported revenues that declined to US$ 2.98 billion from US$ 3.44 billion a year ago.
Interest expenses for the third quarter were US$ 461 million, compared to US$ 535 million in the year ago quarter.
Bruce Flatt, chief executive officer, Brookfield Asset Management said, "We made significant progress on several fronts during the quarter. We launched several new funds with nearly $7 billion of investor allocations; generated $1.3 billion of new liquidity through equity issuance and asset monetizations; and proposed a recapitalization of an Australian infrastructure group which will expand our operating base in this sector."
At September 30, 2009, Brookfield's total assets under management were US$ 17.90 billion, compared to US$ 15.08 billion at December 31, 2008.
For the nine-month period, net income decreased to US$ 352 million or US$ 0.56 per share from US$ 478 million or US$ 0.75 per share in the same period last year. Cash flow from operations for the period dropped to US$ 1.07 billion or US$ 1.80 per share from US$1.18 billion or US$ 1.92 per share last year.
Revenues for nine months plunged to US$ 8.63 billion from US$ 9.86 billion in the corresponding period last year.
The company also noted that it has raised around $12 billion of external capital for investment, which should enable it to acquire assets in the bottom portion of this market cycle.
"Our liquidity position is strong and we have continued to deploy capital into investments which we believe will generate above-average returns over the long term. We believe that we are now into the recovery phase of this downturn and are therefore continuing to capitalize on the environment to add assets which should pay off for us in the years ahead." Flatt concluded.
Brookfield Asset Management also declared a dividend of US$ 0.13 per Class A Common Share, payable on February 28, 2010 to stockholders of record as of the close of business on February 1, 2010. The Board also declared all of the regular monthly and quarterly dividends on its preferred shares.
BAM is currently trading at US$ 21.22, down US$ 0.46 or 2.12% on the NYSE. In the past 52 weeks, the stock trended in a broad range of US$ 11.21 - US$ 24.34, with a three-month average volume of 1.34 million shares.
BAM-A.TO is trading at C$22.74, down C$0.46 or 1.98% on the Toronto Stock Exchange.
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