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Lazard Ltd. (LAZ), the largest independent merger adviser, reported first-quarter profit that beat analysts’ estimates as financial advisory fees climbed and operating revenue reached a record.
Net income fell 23 percent to $44.8 million, or 33 cents a share, from $58.5 million, or 43 cents, a year earlier, the Hamilton, Bermuda-based company said today in a statement. The average estimate (LAZ) of 10 analysts surveyed by Bloomberg was for earnings of 24 cents. Operating revenue rose 9.2 percent to a record $498.7 million.
Lazard, run by Chief Executive Officer Kenneth Jacobs, is advising some of this year’s biggest deals, including GDF Suez’s $10.2 billion announced purchase of International Power Plc and TNT Express NV’s $6.85 billion proposed sale to United Parcel Service Inc. Jacobs, 53, has said the “seeds” for a mergers- and-acquisitions recovery, including available financing, are in place.
“The macroeconomic environment has improved since last summer but remains uncertain,” Jacobs said in the statement. “If this improvement continues, strategic advisory activity will likely increase.”
Lazard rose 3.1 percent to close at $27.60 in New York and has gained 5.7 percent this year.
Revenue from the firm’s financial-advisory business climbed 21 percent to $277.2 million in the first quarter from a year earlier. Asset-management revenue fell to $210.1 million from $224 million.
“The environment feels better than last autumn, CEO confidence needs to continue to build up,” Chief Financial Officer Matthieu Bucaille said in a phone interview following results. “If this improvement continues, I think we should see the benefits over time in our top and bottom line.”
Lazard is among firms coping with a dip in M&A volume as concern about the European sovereign-debt crisis and slow economic growth in the U.S. stalled transaction closings. The firm earned $192.6 million in fees from advising M&A and strategic transactions, up from $163.8 million last year. Revenue from advising capital markets fell 51 percent to $14.4 million, while restructuring advisory revenue almost doubled to $70.2 million.
Lazard set aside $312.7 million for compensation expense in the quarter, up from $268.9 million last year. Bucaille said the firm is focused on maintaining “strong discipline” with regard to expenses
The firm said it increased its quarterly dividend 25 percent to 20 cents per share, a move that was previously announced.
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