Franklin Resources Q2 Profit Declines, But Meets View

(RTTNews) - Franklin Resources Inc. (BEN) on Monday reported a 2 percent decline in profit for the second quarter from last year, as higher taxes and lower investment income more than offset an increase in revenues and operating margins. However, earnings per share for the quarter matched analysts' expectations, while revenues slightly missed their estimates. Assets under management increased 8 percent from last year.

San Mateo, California-based Franklin Resources is an asset management holding company that offers investment vehicles for clients, including individuals, institutions, pension plans, trusts and partnerships.

Net income attributable to the company for the second quarter was $561.0 million or $0.89 per share, down from $572.8 million or $0.90 per share in the year-ago period. On average, 18 analysts polled by Thomson Reuters expected earnings per share of $0.89 for the quarter. Analysts' estimates typically exclude one-time items.

Operating revenues for the quarter grew 4 percent to $2.10 billion from $2.01 billion in the year-ago period. Analysts had a consensus revenue estimate of $2.11 billion.

The company's investment management fees for the second quarter grew 8 percent from the year-ago period to $1.37 billion, while sales and distribution fees declined 1 percent to $638.6 million. Shareholder servicing fees declined 12 percent to $67.7 million, while other revenues declined 19 percent to $21.6 million.

Total operating expenses rose 2 percent from the prior-year period to $1.31 billion. Operating margin expanded to 37.5 percent from 36.2 percent in the same period last year.

Investment and other income fell 82 percent from last year to $17.0 million, while interest expenses increased 5 percent to $11.4 million. Taxes on income rose 8 percent to $238.8 million.

As at September 30, 2013, the company's total assets under management or AUM were $886.9 billion. AUM increased $63.2 billion or 8 percent year-on-year, chiefly due to $68.7 billion of market appreciation.

BEN closed Friday's trading at $52.77, down $1.09 on a volume of 2.15 million shares.