T. Rowe Price Group Inc. profits fell by 33% in the first quarter as the Covid-19 pandemic swept across the world, disrupting economies and causing a massive selloff in the stock market.
The Baltimore-based money manager ended the first quarter with $1 trillion in assets under management, down from $1.2 trillion at the end of December.
T. Rowe Price experienced net outflows of $6 billion during the quarter as some clients moved their money from stocks to safer fixed income and money market strategies. Clients transferred $4.4 billion in net assets from U.S. mutual funds to other investment products, primarily retirement date trusts.
The company's profit fell to $343.1 million, or $1.41 per share, in the first quarter, from $512.6 million, or $2.09 per share, in the prior-year quarter.
On an adjusted basis, T. Rowe Price reported net income of $454.3 million, or $1.87 per share, from the $460.6 million, or $1.87 per share, reported for the prior-year quarter. T. Rowe adjusts its numbers for the impact of consolidated investment products; market movements on its supplemental savings plan liability and related economic hedges; investment income related to certain other investments; and nonrecurring charges and gains.
Despite a decline, T. Rowe Price's (NASDAQ: TROW) profit exceeded Wall Street expectations. Shares rose 7% to $113.99 in trading Monday morning.
Analysts polled by the Thomson Financial Network projected earnings of $1.79 per share. T. Rowe Price's net revenue increased 11% in the first quarter to $1.46 billion, beating an estimate of $1.43 billion.
"The coronavirus pandemic has brought considerable change and uncertainty to our world," CEO William J. Stromberg said in a statement. "Our associates have responded well, and I am extremely proud of the agility and resilience they have demonstrated. All of us remain focused on delivering long-term value to our clients and stockholders."
T. Rowe Price entered 2020 in a strong financial position with no debt and plenty of cash on hand, Stromberg said.
"This strength gives us the confidence to continue investing in our capabilities for the long term, despite volatile markets," Stromberg said.
Highlights from T. Rowe Price's latest financial report include:
- Assets under management in the firm's target date retirement products were $241.9 billion at March 31, compared with $292.4 billion at the end of 2019. A redemption in a risk-managed strategy from a large institutional client was the primary driver of outflows during the quarter.
- Advertising and promotion expenses were $24.9 million in the first quarter, up 15% from the prior-year quarter. The increase was primarily driven by more television media activity.
- T. Rowe Price employed 7,471 associates as of March 31, an increase of 1.4% from the end of 2019. Stromberg said in an interview the company is not currently planning for any reduction in its workforce.
This article originally appeared on Baltimore Business Journal.
