Lazard Beats Estimates as Asset-Management Revenue Increases

Feb 05, 2014 4:19 pm ET

(Updates share price in fifth paragraph.)

Feb. 5 (Bloomberg) -- Lazard Ltd., the largest independent merger-advisory firm, posted fourth-quarter profit that beat analysts’ estimates as asset-management revenue rose to a record.

Net income was $53.2 million, or 40 cents a share, compared with a loss of $5.37 million, or 5 cents, a year earlier, the Hamilton, Bermuda-based company said today in a statement. Profit excluding some items was 81 cents a share, beating the 60-cent average estimate of 12 analysts surveyed by Bloomberg.

Chief Executive Officer Kenneth M. Jacobs, 55, said in December that Lazard’s asset-management business, primarily focused on institutions, didn’t face any “real negative impact” from the downturn in emerging markets. Gains in asset management were bolstered by market appreciation, particularly in global and international equities, according to the statement. The Standard & Poor’s 500 Index jumped 9.9 percent in the fourth quarter and 30 percent in 2013.

“We had a strong year across the board in the asset- management business, driven in part by appreciation in the markets and in part by inflows,” Jacobs said today in a phone interview.

The shares rose 1.2 percent to $43.49 at 4:15 p.m. in New York, after surging as much as 7.4 percent. Lazard has dropped 4 percent this year, compared with a 5 percent decline in the Russell 1000 Index.

Revenue Rises

Asset-management revenue increased 20 percent to $293.2 million, according to the statement. Revenue from advising clients rose 2 percent to $315 million in the fourth quarter from a year earlier. Merger deals completed globally during the fourth quarter climbed 19 percent to $543.1 billion from the previous three months, according to data compiled by Bloomberg.

M&A advisory revenue climbed 43 percent from the third quarter. Jacobs said Lazard participated in 40 percent of global, completed M&A transactions over $10 billion. The U.S. recovery appears to be intact and Europe is more stable, which should improve CEOs’ willingness to consider new deals, Jacobs said.

The company set aside $1.19 billion, or 58.3 percent of revenue, for compensation in 2013, compared with $1.17 billion, or 59.4 percent, a year earlier.

Lazard in 2012 set a target operating margin of 25 percent by 2014, which it said would be achieved through a compensation ratio in the mid to high 50s and a non-compensation ratio of between 16 percent and 20 percent. The company said its awarded operating margin was about 22 percent in 2013.

Evercore Partners Inc., the investment bank founded by former U.S. Deputy Treasury Secretary Roger Altman, last week posted record annual profit of $74.8 million for 2013.

Greenhill & Co., the advisory firm founded by former Morgan Stanley President Robert Greenhill, reported a 4.6 percent increase in fourth-quarter profit last week, to $15.8 million.

--Editors: Steve Dickson, Steven Crabill