Carlyle shares jump after 7% drop in Q4 earnings exceeds estimates

By Chibuike Oguh

NEW YORK (Reuters) -Shares of Carlyle Group rose 10% on Wednesday after it reported a smaller-than-expected drop in fourth-quarter distributable earnings, driven by fewer asset sales from its private equity portfolio.

Distributable earnings, which represents the cash used to pay dividends to shareholders, dropped nearly 7% to $402.7 million from $433 million a year earlier.

That resulted in after-tax distributable earnings of 86 cents. While this represented a decline, it was higher than the mean Wall Street analyst estimate of 78 cents, according to LSEG data.

Carlyle shares jumped to as high as $44.82, up 10%, after the results, and were on track to close at their highest level since April 2022.

"These big beats weren't revenue-driven as both base management fees and realized performance income were in line with expectations," Oppenheimer analyst Chris Kotowski wrote in an investor note. "The beats were driven by a decline in the base compensation ratio," he added.

Carlyle said its net profit from asset sales fell nearly 44% to $257.7 million, as market volatility, high interest rates and geopolitical tensions weighed on its ability to cash out investments.

Income from fund management fees, however, rose 2.5% to $525.1 million, helped by growth in its total assets under management, which reached a record $426 billion in the fourth quarter.

"It was a record year for Carlyle and we're building that momentum into 2024," Chief Executive Harvey Schwartz said during a conference call with journalists.

Carlyle's corporate private equity funds gained 2% during the quarter, while global credit funds rose 4%. Its real estate portfolio lost 2%, while infrastructure and natural resources funds were flat.

Meanwhile, Blackstone Inc's corporate private equity funds gained 3.5%, while its opportunistic real estate portfolio depreciated by 3.8%, the firm said last week. KKR & Co Inc on Tuesday reported that its private equity funds gained 3% while its opportunistic real estate fell 1%.

Carlyle reported a net loss of $692 million under generally accepted principles (GAAP), compared with a net income of $127.2 million a year earlier, owing to a one-time charge of $1.1 billion relating to new changes to its compensation program designed to pay out more profits to employees and executives.

Carlyle spent $7.2 billion on new acquisitions, raised nearly $17 billion of new capital and retained $76 billion of unspent capital as of the end of December. It declared a quarterly dividend of 35 cents.

(Reporting by Chibuike Oguh in New York; Editing by Michael Perry, Sharon Singleton and Mark Porter)