January 28, 2011

2010 Q4 Earnings: T. Rowe Price Boosts Income 26%

Net inflows into the company’s T. Rowe Price mutual funds were $3.2 billion in fourth quarter

T. Rowe Price Group (TROW) said early Friday that it saw a 26% rise in profits, with net income of $191.6 million, or $0.72 cents a share, in the fourth quarter of 2010 versus $152.5 million, or $0.57 cents a share, in the year-ago period.

It also reported fourth-quarter sales of $647.5 million versus $542.6 million in the fourth quarter of 2010.

Equity analysts had expected that T. Rowe would earn $0.69 cents a share on sales of $638.7 million. Despite beating estimates, the firm's shares were trading down with the broader markets on Friday at about $66.40.  

“Although it was a volatile year, the dramatic and broad-based market recovery that started in 2009 continued through 2010,” said T. Rowe Price President and CEO James A.C. Kennedy, in a statement. “Additionally, our strong investment performance continues to attract assets from existing and new clients”

AUM Higher; Net Flows of $6.9 Billion

Assets under management were $482 billion in the fourth quarter, up $42.3 billion from the quarter ending Sept. 30, including $282.6 billion in the T. Rowe Price mutual funds distributed in the United States.

Net cash inflows in the fourth quarter 2010 totaled $6.9 billion, and market appreciation and income added $35.4 billion to assets under management.

Year-end assets under management (AUM) grew nearly $91 billion, or 23%, from $391.3 billion at the end of 2009. Net cash inflows from investors totaled $30.3 billion for 2010, and market appreciation and income added $60.4 billion during the year.

Year-end assets under management increased nearly 21% from the previous year-end high of $400.0 billion as of Dec. 31, 2007.

“Our year-end assets under management hit a record level,” Kennedy said. “Quarterly and annual average assets under management also hit new highs for a reported period. Accordingly, our annual net revenues, net income and earnings have recovered from the recent financial crisis, surpassing their 2007 peaks.”

Relative to the 2009 fourth quarter, investment-advisory revenues earned from the T. Rowe Price mutual funds distributed in the U.S. increased 20%, or $63.5 million, to $381.9 million in the fourth quarter of 2010.

Average mutual fund AUM totaled $272.4 billion in the 2010 quarter, an increase of 21% from the average for the comparable 2009 quarter. Mutual fund assets at Dec. 31, 2010 were $282.6 billion, an increase of $23.9 billion from the end of September 2010, and $49.9 billion from the end of 2009. 

Net inflows to the sponsored mutual funds were $3.2 billion during the fourth quarter of 2010, including $1.7 billion added to the stock and blended asset funds, $1.4 billion to the bond funds, and $0.1 billion to the money market funds.

The New Income, Equity Income, International Bond, and Dividend Growth Funds together added $1.9 billion in net inflows. Market appreciation and income increased mutual fund AUM by $20.7 billion during the fourth quarter of 2010.

Investment advisory revenues earned on other investment portfolios that the firm manages (not T. Rowe Price brands) grew $35.3 million, or 25%, from the fourth quarter of 2009, to $178.6 million.

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