Blackstone profit falls 70%: hits on challenging volatile markets
Blackstone Group LP's fourth quarter profit plunges 70 percent. The world's largest manager of alternative assets said that asset sales slowed and whipsawing markets took a toll across its business.
As reported by New York private equity firm, a fourth quarter profit of $201 million dollars a share down from $551 million dollars a share a year earlier during the same period. With the Blackstone's 70 percent decline in its core income, the long running campaign by the Blackstone Group's chief executive, Stephen A. Schwarzman, to get investors to pile into his stock was hurt.
The New York Times reported that, the lucrative performance fees that Blackstone receives when it unloads various investments nearly vanished in the fourth quarter. These were at the heart of company's business model and as a result of the stock market in broad retreat.
Thus, as a result of this, its economic net income sank to $435 million in the fourth quarter from $1.4 billion in the quarter a year ago. Economic net income includes unrealized gains as well as cash earnings. Chairman and Chief Executive Stephen Schwarzman acknowledged markets were "challenging and volatile" during the period. He also said that the firm put a record $32 billion into new investments last year.
According to Financial Times, Buyouts and real estate command just over half of Blackstone's total assets. This has increases 16 % year on year record $336 billion. The results have indicated that profit at Blackstone and its peers remain driven by buyout fees which can flow with rises and falls in public markets.
Blackstone's president, Tony James said that, "We are ideally situated to capitalize on the choppiness with $80bn of dry powder." Blackstone closed at $25.60, down 12 percent in 2016 and 16 percent, including reinvested dividends, since Sept. 30. Blackstone said it would pay a dividend of 61 cents for the quarter, versus 78 cents for the prior year.
The RTT News, listed the Blackstone Group L.P. earnings which clearly stated that,
The earnings for the fourth quarter las year was $0.44 billion vs. $1.45 billion. The year on year earnings decline dropped 69.7 percent. While the EPS for the fourth quarter last year was $0.37 vs. $1.25, the year on year declined to 70.4 percent. Also the revenue for last year's fourth quarter was$0.88 billion vs. $2.14 billion and the year on year revenue change dropped to 58.9 percent.
In the exit gains, at least three exits buttressed results in the quarter which includes a $2.5 billion cash sale of packager Avintiv Inc. the other two includes a $1.7 billion disposal of security-services provider AlliedBarton Security Services LLC and a $1 billion sale of French clinic operator Vitalia.
Blackstone's single biggest public stake, in Hilton hotel chain fared worse and the company listed in 2013. Other big stock holdings, including drug products maker Catalent Inc., retailer Michaels Cos. and oil explorer Kosmos Energy Ltd., also tumbled.