Legg Mason’s second quarter profit down 25 percent

Asset manager Legg Mason Inc. on Thursday said its fiscal second-quarter profit plunged 25 percent as its customers pulled money out of the markets, which experienced the worst quarter since the economic crisis, and its investments lost value. The results, however, topped Wall Street expectations and shares rose with the broader markets in morning trading.

The company reported net income for the three months ended Sept. 30 of $56.7 million, or 39 cents per share, compared with $75.3 million, or 50 cents per share, in the same period last year.

Total revenue slipped to $669.9 million, from $674.8 million last year.

Analysts, on average, were expecting a profit of 38 cents per share on revenue of $667.8 million.

Included in the quarter’s results was a special tax benefit from the U.K. of $18.3 million, or 13 cents per share. That was more than double a similar tax benefit of $8.9 million in the prior year.

The results also included losses on corporate investments, not offset in compensation, of $19.7 million, compared with $12.9 million of gains in the prior year. Also included in this quarter’s results were $15.1 million, or 7 cents per share, in transition-related costs.

Assets under management fell to $611.8 billion down 9 percent from $673.5 billion a year earlier. Investors withdrew $17.6 billion from Legg Mason funds, including $8.8 billion from fixed income funds.

“The quarter was marked by extreme market volatility and continued economic uncertainty that led to many investors moving to, or staying on, the sidelines,” CEO Mark Fetting said in a statement.

For the quarter, Legg Mason reported $10 million in revenue from performance fees, down from $19.5 million last year. Revenue from its funds rose 5 percent, to $376.8 million.

Legg Mason shares added $1.64, or nearly 6.1 percent, to $28.62 in early afternoon  trading. The shares are down 23 percent for the year.