February 11, 2015 / 2:16 PM / 5 years ago

UPDATE 1-Carlyle beats Q4 profit estimates on asset sales

(Adds details on the earnings, executive comment)

By Greg Roumeliotis

Feb 11 (Reuters) - Carlyle Group LP reported a 68 percent year-on-year drop in fourth-quarter profit, as the appreciation of its portfolio slowed down, yet the decline was smaller than most analysts expected due to strong cash proceeds from asset sales.

Like its alternative asset management peers, Carlyle was hit by its exposure to the energy sector, as the plunge in crude oil prices reduced the value of some of its assets.

But the main driver of Carlyle’s earnings decline was its inability to beat the 6 percent appreciation seen in its portfolio in the fourth quarter of 2013. It appreciated by just 1 percent in the fourth quarter of 2014.

Carlyle also blamed the absence of hedge fund performance fees for the earnings decline.

The Washington, D.C.-based private equity firm said on Wednesday that economic net income (ENI), an earnings metric that factors in the mark-to-market value of its portfolio, was $181 million in the fourth quarter of 2014 versus $562 million in the corresponding period in 2013.

This translated into post-tax ENI per share of 56 cents per adjusted unit in the fourth quarter of 2014, ahead of the average analyst forecast of 44 cents in a Thomson Reuters poll.

Carlyle shares were up 6.1 percent at $28.70 in pre-market trading in New York.

Distributable earnings came in at $311 million in the quarter, down from $400 million a year earlier but higher than what most analysts expected, as Carlyle continued to cash out on its investments.

In the quarter, Carlyle sold equity stakes in British roadside assistance company RAC Limited, performance coatings provider Axalta Coating Systems, chemical company PQ Corp and industrial and construction supplies distributor HD Supply Holdings Inc.

Carlyle said it had $57.9 billion in so-called dry powder as of the end of December available to spend on investments.

“With our major funds reloaded, we are well positioned to take advantage of market volatility, particularly in the energy sector,” Carlyle co-chief executive William Conway said in a statement.

Carlyle’s assets under management were $194.5 billion as of the end of December, down from $202.6 billion as of the end of September.

Carlyle declared a fourth-quarter distribution of $1.61 per common unit. (Reporting by Greg Roumeliotis in New York; Editing by Chizu Nomiyama and W Simon)

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