Carlyle's second-quarter earnings drop as energy funds suffer

Wed Jul 29, 2015 8:55am EDT
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By Greg Roumeliotis

(Reuters) - Private equity firm Carlyle Group LP (CG.O: Quote) said on Wednesday its second-quarter earnings dropped 38 percent year-on-year as the value of its energy and hedge funds decreased, even as it generated more cash by cashing out on several of its assets.

Carlyle's private equity portfolio appreciated 5 percent in the second quarter, roughly in line with last year. But its energy funds depreciated amid lower commodity prices, and its hedge fund unit Claren Road Asset Management also saw losses.

As a result, Carlyle said economic net income (ENI), an earnings metric that factors in the mark-to-market value of its portfolio, dropped to $180 million in the second quarter from $289 million a year earlier.

This translated to post-tax ENI per adjusted unit of 55 cents versus the 54-cent average forecast of analysts in a Thomson Reuters poll.

Like its major peers, Carlyle has diversified beyond corporate buyouts into alternative credit, real estate and funds of funds. Yet private equity dominates its income, accounting for 33 percent of assets under management but contributing 99 percent of its earnings in the quarter.

Carlyle sold shares in several of its companies in the quarter, including Nielsen NV (NLSN.N: Quote), CommScope Holding Company Inc COMM.O, Axalta Coating Systems Ltd (AXTA.N: Quote) and Applus Services SA APPS.MC.

The cash from those and other asset sales resulted in $386 million in distributable earnings in the quarter on a pre-tax basis, up from $323 million a year earlier.

Carlyle's assets under management were $192.8 billion as of the end of June, only marginally up from $192.7 billion as of the end of March.   Continued...

A general view of the lobby outside of the Carlyle Group offices in Washington, May 3, 2012.  REUTERS/Jonathan Ernst