BOSTON: Invesco Ltd said its first-quarter profit nearly doubled, boosted by its acquisition of the retail asset management business of Morgan Stanley, but the asset manager faced questions about mixed flows to its funds.
Shares were down 1.97 percent at $24.36 in morning trading, although the company also raised its quarterly dividend 11.4 percent to 12.25 cents per share.
Invesco posted net income of $177.5 million, or 38 cents per share, up from $95 million, or 21 cents per share, a year earlier. Analysts surveyed by Thomson Reuters I/B/E/S on average expected 39 cents a share.
Analysts also focus on profit adjusted for items including joint ventures and consolidated investment results. On that basis, Invesco earned 41 cents a share, a penny less than analysts expected.
Operating revenue rose to $1.03 billion from $719.1 million, helped by the Morgan Stanley deal, which included the Van Kampen Investments line. The acquisition closed on June 1, 2010.
Invesco reported long-term net inflows of $6.6 billion in the first quarter, compared with a net outflow of $17 billion in the 2010 fourth quarter.
Sandler O'Neill analyst Michael Kim said it was encouraging that the company beat his estimate that it would earn 40 cents a share on an adjusted basis. Inflows also beat his estimate.
But a point of caution, Kim said, was Invesco's note that most of the inflows were to products such as passive and exchange traded funds, which tend not to be as profitable as traditional products.
Citigroup analyst William Katz made a similar point in a note to investors, titled "Soft Start" for the company. "Core flows weak" he wrote.
On a conference call with analysts, executives stressed that inflows to products like its PowerShares ETFs are still helping the company's margins.
"While (the) inflow may reduce our aggregate effective fee rate, it does not mean those are detrimental," said Invesco Chief Financial Officer Loren Starr.
Invesco said that on an adjusted basis, performance fees fell to $3.8 million from $18.7 million in the previous quarter.
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