Baltimore-based Legg Mason Inc. said Tuesday that its fiscal fourth-quarter profit increased 10 percent as it cut expenses to offset the impact of lower stock and bond assets.
Net income rose to $76.1 million, or 54 cents a share, in the three months that ended March 31, from $69 million, or 45 cents, a year earlier, the firm said. Fifteen analysts in a Bloomberg survey had expected earnings of 47 cents per share, excluding some costs.
Legg Mason also said it was boosting its dividend 38 percent to 11 cents a share.
Chief Executive Officer Mark Fetting has cut jobs to increase profitability and sought to improve performance at fund units as he tries to end redemptions that started after returns lagged those of peers in 2007 and 2008. Legg Mason has completed a plan designed to save $130 million to $150 million per year through a combination of job cuts and moving certain technology functions to investment units. Cost savings drove profits as client redemptions of $4.9 billion contributed to lower fee-generating assets.
“They’re at the tail end of their restructuring so they’re starting to see some benefits from that,” Macrae Sykes, an analyst with Gabelli & Co., told Bloomberg in an interview.
Legg Mason reported results before the start of regular U.S. trading. Its shares have declined 30 percent in the past 12 months, compared with the 8.6 percent drop in the Standard & Poor’s 20-company index of custody banks and asset managers.
Expenses fell 6.2 percent from a year earlier to $576 million as Legg Mason completed its restructuring plan. Costs from that plan fell to $1.9 million in the quarter, compared to $15.7 million a year earlier.
Revenue earned for managing investor funds dropped 9.1 percent to $649 million, as advisory fees and performance fees for beating certain benchmarks fell from a year earlier.
Legg Mason’s assets fell 5.1 percent from a year earlier to $643.3 billion. Stock assets, decreased 14 percent to $163.4 billion in the year ended March 31. Bond assets, managed mostly by Legg’s Western Asset Management unit, declined 0.1 percent to $356.1 billion and money funds fell 5.8 percent to $123.8 billion, the firm said.
Legg Mason’s investors pulled $2.8 billion from bond funds and $4.9 billion from stocks during the quarter. They deposited $2.8 billion into Legg Mason’s money funds.