(Reuters) – KKR & Co LP on Thursday reported a smaller-than-expected 4.9 percent year-on-year drop in first-quarter profit, as proceeds from private equity asset sales offset most credit investment losses.
KKR attributed the earnings decline to paper losses on collateralized loan obligations and other credit investments. The results are in sharp contrast to rival Blackstone Group LP , which last week said its first-quarter profit doubled.
Still, KKR had some big wins in the quarter. It sold its remaining stake in British drugstore chain Alliance Boots to Walgreens Boots Alliance Inc. It also sold stock photography company Fotolia to Adobe Systems Inc and sold Big Heart Pet Brands to J.M. Smucker Company.
Economic net income (ENI), KKR’s headline earnings metric, which takes into account the mark-to-market valuation of its assets, was $599.4 million in the first quarter, down from $630.3 million a year ago, the New York-based firm said.
After-tax ENI was 62 cents per adjusted share, versus the average 53 cents forecast by analysts in a Thomson Reuters poll.
ENI in KKR’s credit investments unit was $2.8 million, down 97 percent. By comparison, Blackstone ENI in its credit unit was down only 3 percent to $78.4 million. KKR’s head of credit and capital markets Craig Farr stepped down last month and was succeeded by Nat Zilkha, Alan Burke and Adam Smith.
Distributable earnings, which show cash available to pay dividends, was $516.5 million, up from $446.8 million a year ago.
Assets under management totaled $99.1 billion at the end of March, down from $102.3 billion a year ago.
KKR announced a first-quarter dividend of 46 cents per share, up from 43 cents in the first quarter of 2014.
KKR was founded in 1976 by Henry Kravis, George Roberts and Jerome Kohlberg.