T. Rowe Price profit fell 27% in 1st quarter

Mutual fund company's earnings per share declined 10 cents, or 24 first quarter

April 26, 2003|By Bill Atkinson | Bill Atkinson,SUN STAFF

T. Rowe Price Group Inc.'s profit sank 27 percent in the first quarter, and revenue and assets under management also fell, as stock market volatility continued to ravage money managers, the company said yesterday.

Price, a global investment management firm based in Baltimore, made $38.8 million in the first quarter, which ended March 31, down from $53 million in the corresponding period a year earlier. Earnings per diluted share slipped 24 percent in the quarter to 31 cents, down from 41 cents a year earlier.

Revenue fell 9.6 percent in the quarter to $218.7 million, compared with revenue of $242 million in the 2002 first quarter.

"Basically, we need a better market before things will really get better," said George A. Roche, Price's chairman and president. "It is payback for the mania" of the late 1990s when stock prices soared.

Shares of Price rose 2 cents to close at $29.65 on the Nasdaq stock market.

Despite the decline, earnings were better than anticipated. Two weeks ago, Roche told shareholders at the company's annual meeting that first-quarter earnings per share would slip by 30 percent.

"It looked better than expected, but they had set the bar lower," said Matthew Snowling, a senior financial services analyst at Friedman, Billings, Ramsey & Co., an investment banking firm in Arlington, Va.

"It is a tough operating environment. It is tough for T. Rowe, it is tough for the whole industry," Snowling said.

Total assets managed by Price slid to $139.9 billion, down 12.5 percent, from $159.8 billion a year earlier.

Mutual fund assets were $86.9 billion at the end of the March quarter, down 13 percent, from $100 billion in the first quarter of 2002.

Since the beginning of the year, however, the decline in assets has slowed, according to the company.

Net cash inflows from investors into funds and other instruments totaled about $2.1 billion in the quarter. Of that money, $1.7 billion went into mutual funds, the highest quarterly net inflow in five years.

Investors pumped most of the money into four T. Rowe Price mutual funds: Equity Income, Mid-Cap Growth, High Yield and Blue Chip Growth.

"I would say we are quite happy with the flows," Roche said. "This was a real pickup."

He said the strong performance of Price's mutual funds has helped boost inflows.

Nearly two-thirds of Price's domestic mutual funds are rated four and five stars, the two top ratings given out by Morningstar, the Chicago company that tracks the mutual fund industry.

"They are relatively better positioned than other" funds, said Snowling, the Friedman, Billings analyst. "T. Rowe funds have performed much better than other fund families."

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