Apollo Global Management LLC said on Wednesday its second-quarter earnings fell 6 percent, missing most analysts’ expectations, as it sold fewer of its private equity holdings while taxes and expenses rose.
At a time when robust equity and debt markets have allowed private equity firms to post big profits by selling assets, Apollo’s second-quarter earnings make it an outlier. Blackstone Group LP, KKR & Co LP and Carlyle Group LP all posted bumper profits for the quarter.
Most of Apollo’s private equity asset sales in the second quarter were in the form of divestments of stock in already publicly listed companies, including grocery chain Sprouts Farmers Market Inc, industrial equipment provider Rexnord Corp, packaging company Berry Plastics Group Inc and specialty insurer Brit Plc.
Total economic net income after taxes was $207.5 million, compared with $220.1 million a year earlier. This translated into ENI per share after taxes of 52 cents, lower than the analysts’ average estimate of 66 cents, according to Thomson Reuters I/B/E/S.
Apollo cited a higher tax provision and increased profit-sharing expenses for the $12.6 million decrease in ENI.
Apollo’s private equity portfolio appreciated 5 percent in the quarter, in line with both Carlyle’s and KKR’s private equity funds, but less than the 8.4 appreciation in Blackstone’s buyout funds.
ENI in Apollo’s private equity segment fell 32 percent.
In the credit segment, however, ENI was up 114 percent due to higher management fees as Apollo’s Athene Holding Ltd life insurance firm benefited from the acquisition of the U.S. life and annuities business of Aviva Plc. The credit segment accounts for close to two-thirds of Apollo’s assets.
Distributable earnings after taxes and related payables, which show actual cash available to pay dividends, came to $227.1 million versus $603.9 million a year earlier.
Total assets under management were $167.5 billion at the end of June, up from $159.3 billion at the end of March.
Apollo declared a second-quarter dividend of 46 cents, down from 1.32 cents a year ago.
(Reporting by Greg Roumeliotis in New York; Editing by Jeffrey Benkoe and Lisa Von Ahn)