April 23, 2015 / 11:17 AM / 4 years ago

Lazard profit beats estimates on higher M&A advisory fees

(Reuters) - Investment bank and asset manager Lazard Ltd (LAZ.N) reported a better-than-expected quarterly profit as a jump in corporate dealmaking boosted its M&A advisory fees.

M&A and other advisory fees for Lazard, the sole adviser to H.J. Heinz Co in its merger with Kraft Foods Group Inc KRFT.O, rose 9 percent to $260.8 million in the first quarter.

Lazard Chief Executive Kenneth Jacobs said companies are still facing challenges with organic growth as well as deflation in some markets, both of which also tend to drive M&A activity.

“Generally speaking, confidence is improving, valuations are a little pricey both here and in Europe, but relative to the cost of money they appear ok, and financing is generally available,” Jacobs told Reuters.

Companies around the world announced deals worth a total of $811.8 billion in the quarter, the highest first-quarter level since 2007, according to preliminary Thomson Reuters data.

Some of the other ongoing big deals that Lazard is part of include AT&T Inc’s (T.N) $67.1 billion bid for DirecTV DTV.O and Pfizer Inc’s (PFE.N) $17 billion offer for Hospira Inc HSP.N.

Lazard, which is focusing on asset management to reduce reliance on financial advisory fees, reported a 7 percent rise in average assets under management to $198 billion.

The company’s adjusted net profit rose to $103 million, or 77 cents per share, in the quarter ended March 31, from $81.3 million, or 61 cents per share, a year earlier.

Analysts on average had expected earnings of 70 cents per share, according to Thomson Reuters I/B/E/S.

Total operating revenue rose 8 percent to about $581 million. M&A and other advisory fees accounted for roughly 45 percent of total revenue.

Smaller rival Evercore Partners Inc (EVR.N) reported a 59 percent fall in quarterly profit on Wednesday, hurt by higher compensation-related expenses.

Lazard increased its quarterly dividend on class A common stock to 35 cents per share from 30 cents.

Lazard’s stock has been the best performer among boutique investment banks, gaining about 15 percent this year through Wednesday’s close of $56.56 on the New York Stock Exchange.

Shares of Evercore, Moelis & Co (MC.N) and Greenhill & Co Inc (GHL.N) have fallen about 7 percent on average in the same period.

(This story corrects spelling of dividend in fourth bullet)

Editing by Savio D'Souza and Sriraj Kalluvila

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