Asset management company Franklin Resources Inc. (BEN) on Tuesday reported a 22% rise in net profit for the fourth quarter, notwithstanding a 6% drop in revenues, reflecting an increase in total assets under management and investment gains.
The San Mateo, California-based company's net income for the fourth quarter climbed to $367.36 million from $300.49 million in the prior-year quarter. On a per share basis, earnings increased 25% to $1.60 from $1.28 in the year-ago quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to earn $1.33 per share for the quarter. Analysts' estimate typically exclude one-time charges and gains.
In the previous quarter, Franklin Resources net income dropped 26% to $297.72 million from $403.31 million in the same quarter a year ago. On a per share basis, third quarter earnings were down 25% to $1.29 from $1.71 in the year-ago quarter.
For the fourth quarter, total operating revenues dropped to $1.24 billion from $1.32 billion last year. Street analysts had a consensus revenue estimate of $1.21 billion for the quarter.
For the sequentially preceding quarter, revenues declined 29% to $1.07 billion from $1.32 billion in the prior-year quarter.
Investment management fees for the latest fourth quarter declined 12% year-over-year to $725.00 million, while underwriting and distribution fees edged up 2% to $433.36 million from last year. Shareholder-servicing fees for the quarter slid 3% to $67.38 million from last year, while consolidated sponsored investment products income climbed 10% to $1.64 million from the same quarter a year ago.
Total operating expenses for the quarter dropped 6% to $854.20 million from the previous-year quarter and operating income decreased 7% year-over-year to $384.72 million.
The Franklin Templeton mutual funds manager's non-operating income for the quarter included $87.2 million of investment and other income, compared to $77.8 million in the year-ago quarter.
Sponsored investment product gains for the quarter were $31.90 million, compared to sponsored investment product losses of $35.51 million in the year-earlier period.
Other income for the quarter surged to $118.81 million from $41.78 million last year, while net fund inflows for the quarter were $12.2 billion.
At September 30, 2009, Franklin Resources' total assets under management by the subsidiaries increased 22% to $523.4 billion from $507.3 billion at September 30, 2008. At September 30, 2009, equity assets comprised 47% of total assets, fixed-income assets comprised 33% of total assets and Hybrid assets accounted for 19% of total assets under management.
Cash, cash equivalents and investments were $5.8 billion at September 30, 2009, as compared to $5.2 billion at September 30, 2008.
For the full-year, net income plunged 44% to $896.78 million from $1.59 billion last year. On a per share basis, earnings tumbled 42% to $3.87 per share from $6.67 per share a year earlier. Total operating revenues for the fiscal year 2009 slumped 30% to $4.19 billion from $6.03 billion last year.
Analysts expected the company to earn $3.61 per share on revenues of $4.17 billion for the full-year.
Amongst others in the sector, Denver, Colorado-based BlackRock, Inc. (BLK), on October 20, reported a 46% rise in net profit for the third quarter, reflecting a one-time tax related benefit, lower expenses and increased risk appetite among clients, even as revenues dropped 13% stemming from a drop in fees associated with a market driven reduction in average assets under management.
BEN is currently trading at $109.31, down $3.57 or 3.32%, on a volume of 1.12 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $37.11 - $116.39, with a three-month average volume of 1.54 million shares.
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