July 25, 2019 / 11:03 AM / 3 months ago

Lazard sees better financial advisory business in second half, shares up

(Reuters) - Lazard Ltd (LAZ.N) said on Thursday it expects its financial advisory business to post better results in the second half of 2019, sending shares up about 6%.

The logo and trading information for Lazard Ltd appear on a screen on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 24, 2019. REUTERS/Brendan McDermid

Mergers and acquisitions (M&A) advisory activity for the financial adviser has picked up globally since end June, including in Europe, where the company saw a dip in completed deals in second quarter, it said.

Mega deals have set the pace for M&A globally as large U.S. companies defied U.S.-China trade row jitters and seized on strong equity and debt capital markets last quarter.

While global M&A volume fell 27% to $842 billion from first quarter, it could have been significantly worse if it was not for those mega deals, Refinitiv data showed.

Lazard advised on several high-profile deals in the quarter such as International Business Machines Corp’s (IBM.N) $34 billion acquisition of software company Red Hat Inc and Ingersoll-Rand Plc’s (IR.N) $15 billion spin-off of its industrial unit.

“In financial advisory, we continue to expect the second half of 2019 to be stronger than the first half,” Chief Financial Officer Evan Russo said on a call with analysts.

In the second quarter, revenue from the business fell 21%, but was better than what analysts’ had feared and even helped the financial adviser to beat quarterly profit estimates.

Lower restructuring revenue and softness in European deal completions hurt the unit, the company said.

Lazard wasn’t the only one hurting. Financial advisory business was weak for several of the big U.S. investment banks such as Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) in the quarter.

The company’s asset management business saw outflows of $5.2 billion and resulted in a 12% drop in revenue in the unit to $291 million.

The Bermuda-headquartered company said total revenue fell 16% to $$650.8 million.

Net income attributable to the company fell to $65.8 million, or 55 cents per share, in the quarter ended June 30, from $147.0 million, or $1.13 per share, a year earlier. (reut.rs/2GtltNL)

On an adjusted basis, the company earned 73 cents per share, ahead of analsyts’ estimate of 63 cents.

(The story corrects to say 2019 and not 2018 in paragraph one.)

Reporting by Bharath Manjesh in Bengaluru; Editing by Shinjini Ganguli

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