BlackRock earnings fall short of expectations

BlackRock, the largest asset manager in the world, reported quarterly earnings that missed analysts’ expectations on Wednesday as a market downturn late last year eroded its asset base. Revenue slightly exceeded a revised estimate by Refinitiv.

Earnings for the asset manager fell nearly 60 percent to $927 million over the past year. On an adjusted basis, earnings per share were $6.08, falling short of analyst expectations of $6.27 per share. BlackRock’s adjusted reported bottom line represents a 2 percent decline from the year-earlier period, when its posted a profit of $6.19 per share.

The profit drop was skewed in part due to a large benefit from the tax cut a year ago.

BlackRock’s closely followed assets under management totaled $5.98 trillion at the end of the quarter, a 5 percent decline over the past 12 months and a 7 percent slip from the prior quarter. However, CEO Larry Fink told CNBC’s “Squawk Box” on Wednesday that since the end of the quarter, the company’s assets under management had clawed back above $6 trillion.

“We had huge equity declines in the fourth quarter, we had commodity declines. We had about a 5 percent decay in our asset base, not because of outflow, but because the market fell,” Fink said. “We all know the fourth quarter was a pretty severe down graph in the equity markets, and that reflects in our net asset value, but we had organic growth unlike the majority of the industry.”

The U.S. equity markets suffered a tough end to 2018, with both the Dow Jones Industrial Average and the S&P 500 falling more than 10 percent in the three months ended Dec. 31. Both indexes posted their worst December since the Great Depression as fears of slowing economic growth and rising borrowing costs kept corporate leaders on-edge.

Sales at the financial giant totaled $3.434 billion, slightly exceeding analyst expectations of $3.432 billion, according to Refinitiv’s revised estimate. The revenue figure was a 9 percent slump from the fourth quarter of 2017. Revenue from its advisory, administration and lending business fell to $2.8 billion, a decline of $118 million over the last year.

The company’s board of directors approved an increase in its quarterly cash dividend, bumping it to $3.30. The financial giant also saw record quarterly inflows of $81 billion in its iShares business as the high-growth exchange-traded fund segment continues to expand. The firm saw $50 billion of fourth quarter total net inflows and $124 billion of full-year inflows.

The New York-based asset manager returned $3.6 billion to shareholders in 2018, including $1.7 billion of full year share repurchases.