T. Rowe Price's 4Q profit falls 18%

2001's earnings drop 27%, assets under management, 6%

Mutual funds did well

January 26, 2002|By Bill Atkinson | Bill Atkinson,SUN STAFF

Hampered by a weak economy and listing stock market, T. Rowe Price Group Inc.'s fourth-quarter profit fell 18.9 percent as assets the firm manages declined, the company said yesterday.

It was the first time since 1990 that Price's profit for the full year was less than the previous year.

The Baltimore mutual fund company made $45 million, or 35 cents per share, in the fourth quarter that ended Dec. 31, compared with $55.5 million, or 43 cents per share, in the corresponding period a year earlier.

Revenue sank 17.2 percent to $241.3 million in the quarter, compared with $291.6 million in the fourth quarter in 2000.

Price's earnings per share beat Wall Street estimates by 2 cents, according to Zacks Investment Research, which surveyed 14 analysts.

The company's shares rose 16 cents yesterday to close at $36.35.

"They had a bit of a challenging quarter and a challenging year," said Rachel Barnard, a stock analyst at Morningstar Inc., an investment research firm in Chicago.

"It is not surprising. T. Rowe Price is very heavily weighted in stocks. As that [the market] drops their income falls off," Barnard said.

During the full year, Price's profit fell 27.2 percent to $195.9 million, or $1.52 per share, compared with $269 million, or $2.08 per share, the previous year.

Revenue fell 15.2 percent in the year to $1 billion, compared with $1.2 billion a year earlier.

George A. Roche, T. Rowe Price's chairman and president, said he was not disappointed with the results.

"It was just a very difficult and unusual year because you had the stock market down two years in a row," Roche said.

The Sept. 11 terrorist attacks also shuttered the market for four days, making it more difficult for mutual fund companies to attract new business.

In the quarter, Price slashed expenses by 17 percent to $165.2 million. Expenses during the year fell to $696.9, or by 7.6 percent.

Price's total assets under management rose by $15.9 billion in the fourth quarter to $156.3 billion. But total assets under management were down 6.2 percent in the year from the prior year's $166.7 billion under management.

Most of the decline in assets was a result of lower valuations of stocks held by Price mutual funds.

The Science & Technology Fund and the international funds accounted for $7.5 billion out of $8.3 billion in market depreciation in 2001.

There were some bright spots in 2001, Roche said.

Price's mutual funds performed well despite the soft market. Among actively managed domestic equity funds, 20 of 23 T. Rowe Price funds were in the upper half of their peer group last year, according to Lipper, a firm that tracks mutual fund performance.

The company also began managing Alaska and Maryland's new college savings plans. And it has expanded its mutual fund business in Europe.

"We are making substantial progress," Roche said. "We have a number of areas where we are continuing to move the company forward."

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