T. Rowe Price earnings rose 30% in 2nd quarter

July 23, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

T. Rowe Price Associates Inc. said yesterday that its second-quarter profits jumped 30 percent, but a top company executive conceded that more difficult stock and bond markets could make it impossible to sustain such large year-over-year gains into next year.

The Baltimore mutual fund company said it took in $92.5 million of revenue during the quarter. Net income was $15 million, or 49 cents a share, both company records. The company earned $11.5 million, or 38 cents a share, in the second quarter last year.

"We're very influenced by the market," said James Riepe, president of T. Rowe Price Investment Services. "Investors are coming into our funds, but not at the rate they were in 1993, which was very unusual. We're optimistic about normal growth. These kinds of growth rates are not sustainable."

Indeed, T. Rowe Price President George J. Collins said the big reason for the profit gains was that the firm was managing $35.5 billion in its mutual funds as of June 30, up $6.2 billion from the same date in 1993.

But only $800 million of that increase has come this year. T. Rowe Price has seen customers overall pull a small amount of money out of its bond funds during the second quarter, with growth in stock and international funds offsetting the bond losses and accounting for a $500 million gain in assets under management.

With the engine of the firm's growth slowing down, earnings could plateau, although at a level at or near the record profits the firm has seen since plummeting bank interest rates during and after the 1990-1991 recession sparked a boom in the mutual fund business.

Mr. Riepe said solid earnings gains should continue through the rest of the year.

T. Rowe Price ...... Ticker .. Yesterday's

Associates Inc. ..... Symbol ... Cls. .. Chg.

....... ....... ..... TROW ..... 26 .... + 1/8

Period ended

6/30 ......... 2nd qtr. ..... Year ago ... Chg.

Revenue ....... $92,468 ...... $72,679 ... +27.2%

Net Income .... $15,049 ...... $11,536 ... +30.5%

Primary EPS ..... $0.49 ........ $0.38 ... +28.9%

....... ....... 6 mos. ..... Year ago ... Chg.

Revenue ...... $184,395 .... $141,395 ... +30.4%

Net Income .... $28,802 .... $21,757* ... +32.4%

Primary EPS ..... $0.93 ...... $0.72* ... +29.2%

Figures in thousands (except per share data.)

* Includes a net charge of $330,000, or 1 cent a share, because of onetime changes in accounting principles.

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