T. Rowe Price reports 9.5% increase in earnings

January 26, 1995|By David Conn | David Conn,Sun Staff Writer

T. Rowe Price Associates Inc., the Baltimore-based mutual fund company, reported another quarter of higher earnings yesterday, but the rate of growth has slowed, and the company warned not to expect a sharp upturn in 1995.

Still, while its cousins in the investment banking industry continued to lick their wounds through 1994, T. Rowe Price managed to achieve record highs in revenues and earnings.

Net income in the fourth quarter gained 9.5 percent, to $16.1 million, or 53 cents a share, on revenues of $101 million. A year earlier net income was $14.7 million, or 48 cents a share, on revenues of $89.9 million.

The numbers were released after the stock market closed. Price's shares ended the day at $27.75, up 62.5 cents.

Total assets under management, both in mutual funds and privately managed accounts, increased $3.4 billion during 1994, to a record of $57.8 billion. The mutual funds accounted for $37.3 billion at the end of last year, compared with $34.7 billion in 1993.

Funds invested internationally accounted for a third of assets under management, and a large part of Price's growth last year. Assets managed by Rowe Price-Fleming International, of which Price owns 50 percent, rose $2.9 billion to $18.3 billion at Dec. 31, 1994, including $10.8 billion in the mutual funds.

"Part of the reason we've done well is our firm does have a heavy equity component in general, and the net cash flows to the market favored equity as opposed to fixed income," said George Roche, chief financial officer and a managing director. "And we have, more than most, a significant international business."

But the international waters may get rougher this year, just as the domestic markets turned choppy in 1994, analysts said.

"I think long-term their prospects are enviable," said A. Michael .. Lipper, president of Lipper Analytical Services. "But I think the Mexico, Japan and Southeast Asia syndromes are going to slow people's appetites down" for international funds.

Price's earnings for all of 1994 hit a record, gaining 26 percent to $61.2 million, or $2 a share, compared with $48.5 million, or $1.59 a share in 1993.

But the fourth-quarter's 9.5 percent increase tailed off sharply from the earlier periods, when earnings rose 30 percent to 35 percent over the prior year's quarter. In the fourth quarter of 1993, earnings were 53 percent higher than the year earlier.

"By and large the industry's a growth industry, but there are periods where you have accelerating growth and periods of less rapid growth," Mr. Roche said. "We see '95 as a period of more modest growth, and again that's subject to what happens in the financial markets."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.