Lazard's profit beats on higher restructuring advisory revenue

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(Reuters) - Lazard Ltd’s quarterly profit beat analysts’ estimates as lower costs and higher revenue from advising on restructuring more than made up for a slump in M&A fees.

Both asset management and M&A advisory revenue fell in the second quarter as investors and companies stayed on the sidelines due to the uncertainty stemming from Britain’s vote to leave the European Union and fluctuating oil prices.

Lazard’s revenue from M&A and other advisory fell 25.5% to US$203.4m, while asset management revenue fell about 14% to US$250.7m.

The financial advisory and asset management firm’s revenue from advising on restructuring nearly quadrupled to US$72.3m in the latest quarter.

The value of announced mergers and acquisitions (M&As) worldwide dropped by a third in the second quarter as many deals were abandoned in the wake of concerns over regulatory and tax risks or national security.

However, Chief Executive Kenneth Jacobs said in an interview that he anticipated a better second half in the financial advisory business, as there typically tends to be more deal closings during the period.

Assets under management were US$192bn as of June 30, a 1% increase from March 31, driven by net inflows of US$453m.

The company, ranked No.4 in terms of worldwide M&A advisory fees in the second quarter of 2015, has fallen to No.6 with just 3.9% of the wallet share, according to Thomson Reuters data.

Lazard worked on a number of deals that were closed in the quarter, including Fedex’s US$5bn acquisition of TNT Express and Airbus Group’s €2.4bn sale of a 23.6% stake in Dassault Aviation.

The company is advising Anheuser Busch InBev in the brewer’s US$106bn bid for SABMiller Plc

Lazard’s adjusted net income was 61¢ per share, beating the average analyst estimate of 58¢, according to Thomson Reuters I/B/E/S.

The company’s attributable net income fell to US$80.4 m, or 61¢ per share, in the quarter from US$374.1m, or 2.82¢ per share.

The company recorded a gain of US$1.2bn related to income tax in the year-earlier quarter.

Lazard said its operating expenses fell 70% to US$421.4m.

Net revenue fell 12% to US$534.7m.

Lazard’s shares, which have lost about 23% of their value this year through Wednesday close, were down less than a percent in early trading.

Reporting by Sruthi Shankar; Additional reporting by Olivia Oran

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