Tags: kkr | profit | earnings | oil

KKR Profit Falls 94 Percent in Fourth Quarter as Oil Hits Holdings

Tuesday, 10 Feb 2015 10:11 AM


KKR & Co. said fourth-quarter profit fell 94 percent as the private equity firm led by Henry Kravis and George Roberts marked down energy-related holdings after oil prices slid. The shares fell the most in two months.

Economic net income, which includes unrealized gains, decreased to $46 million, or 5 cents a share, from $743 million, or $1.04 a share, a year earlier, New York-based KKR said in a statement Tuesday. That missed the 44-cent average per-share estimate of 15 analysts in a Bloomberg survey.

The plunge in oil has rippled across markets, erasing value from private equity funds that hold energy producers. Apollo Global Management LLC last week reported a 79 percent drop in fourth-quarter profit as oil’s decline hurt some of its holdings and company exits slowed.

The value of energy investments on KKR’s balance sheet, excluding those classified as private equity, declined during the quarter to 76 cents on the dollar from $1.14. The firm’s private equity portfolio appreciated 2.7 percent, compared with 8.4 percent a year earlier.

“KKR reported a sizable” miss in earnings, “driven primarily by larger than anticipated balance sheet marks,” Jason Weyeneth, an analyst at Sterne Agee & Leach Inc., said in a note.

KKR fell 3.4 percent to $24.14 at 9:31 a.m. in New York, the biggest intraday decline since Dec. 1. The stock had gained 7.6 percent this year through Monday.

Samson, Westbrick

KKR’s measure of economic net income, an accounting metric used by publicly traded buyout firms, differs from U.S. generally accepted accounting principles. Under those rules, known as GAAP, KKR reported a net loss of $583,000, compared with a profit of $277.9 million a year earlier.

The firm said it will pay shareholders a dividend of 35 cents a share on March 6.

Unlike peers Apollo and Carlyle Group LP, KKR doesn’t own many big energy producers that are publicly traded. The firm marks to market closely held positions, including Samson Resources Co., Cinco Resources Inc., Westbrick Energy Ltd. and Raptor Petroleum LLC.

KKR said it’s raised $700 million for its second special situations fund, which Bloomberg News reported last month is seeking as much as $3 billion. Kravis has said the group would target distressed oil producers, and it may also focus on Asian companies seeking capital, Scott Nuttall, KKR’s head of global capital and asset management, has said.

Distributable earnings, which reflect realized gains available to pay out to shareholders, fell 26 percent to $376 million from the fourth quarter of 2013, when KKR sold shares of at least five companies to report strong results. The firm said distributable earnings for 2014 rose 39 percent from 2013.

Total assets under KKR’s management were $98.6 billion as of Dec. 31, after the firm returned $4.1 billion to investors in the fourth quarter.

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KKR Co. said fourth-quarter profit fell 94 percent as the private equity firm led by Henry Kravis and George Roberts marked down energy-related holdings after oil prices slid. The shares fell the most in two months.
kkr, profit, earnings, oil
464
2015-11-10
Tuesday, 10 Feb 2015 10:11 AM
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