Lazard Revenue Rises as Assets Under Management Climb -- Update

By Austen Hufford and Liz Hoffman 

Lazard Ltd. said its third-quarter revenue rose amid gains in its financial advisory and asset-management businesses, while its profit declined on higher costs.

Financial advisory revenue grew 3.8% from last year to $343.5 million. Revenue in its deal-making advisory business fell 2% from a year earlier but rose 38% from last quarter to $281.6 million as several large deals were completed, among them Johnson Controls Inc.'s takeover of Tyco International PLC, a Lazard client.

"The M&A market has been good and in the U.S. really livened up over the past few weeks," Lazard Chief Executive Ken Jacobs said in an interview. "Companies are still looking for top-line growth" as economic growth remains muted.

On the asset management side, revenue 1.3% from a year earlier as assets under management as of Sept. 30 grew 12.5% to $205.44 billion, with net inflows of $2.8 billion.

That makes Lazard one of the few large active managers to see continued large inflows. Investors have shifted billions of dollars to passive strategies that mirror the performance of indexes.

Some of Lazard's strategies, such as those focused on emerging markets or bespoke industries like robotics, are tough to replicate in an index, Mr. Jacobs said. That makes them less vulnerable to being replaced by passive managers -- though competition is coming, from startups like Motif Investing Inc., which allows users to assemble portfolios based on themes.

In Lazard's smaller restructuring business, revenue was $51 million in the quarter, up from $26 million last year but down from $72.3 million last quarter. With low energy prices, a number of energy companies have filed for bankruptcy in recent years, boosting Lazard's restructuring business.

In all for the period, Lazard reported a profit of $112.5 million, or 85 cents a share, down from $398.5 million, or $2.99 a share, a year earlier. Last year's result included a $259 million gain related to a tax receivable agreement.

Net revenue grew 6.2% to $608.9 million.

Analysts polled by Thomson Reuters expected 77 cents in per-share profit and $589.8 million in revenue.

An adjusted figure for compensation expenses rose 4% from the year prior.

Shares rose 1% but remain down 18% for the year, among the worst performers in the financial sector.

Write to Austen Hufford at [e-mail] and Liz Hoffman at [e-mail]

(END) Dow Jones Newswires

October 27, 2016 13:37 ET (17:37 GMT)

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