UPDATE 1-Carlyle's earnings drop on investment exits
Feb 21 (Reuters) - Carlyle Group LP said on Thursday fourth-quarter earnings were down 28 percent as the alternative asset manager failed to match the previous year's sales of assets and relied more on company dividends to return money to investors.
Carlyle's private equity arm, which accounted for about a third of its assets but about two-thirds of its profits, was mostly responsible for the earnings drop, bucking a trend among peers Blackstone Group LP, KKR & Co LP and Apollo Global Management LLC.
This is partly because Carlyle took advantage of stronger capital markets to carry out more refinancings of portfolio companies and pay dividends, which resulted in money returned to fund investors but did not generate so-called carried interest -- a cut of the profits for Carlyle.
Carlyle said economic net income (ENI), a measure of profitability that takes into account market valuation of its assets, came in at $182 million, down from $254 million a year earlier.
This translates into ENI per adjusted unit of 47 cents versus an average forecast of 69 cents by analysts in a Thomson Reuters poll.
Distributable earnings, Carlyle's favored indicator of profitability that shows cash which has been generated and is available to pay distributions to its shareholders, were down 24 percent to $188 million.
This was despite realizing profits in its funds of $6.8 billion for the fourth quarter and $18.7 billion for 2012, up from $17.6 billion in 2011.
Fee-related earnings were $55 million in the fourth quarter, up from $14 million a year ago due to an increase in fee-earning assets under management, lower general and administrative expenses, and $18 million in proceeds from an insurance settlement, Carlyle said.
The Washington, D.C.-based firm capped a very strong year for fundraising, amassing $14 billion in 2012 compared with $6.6 billion in 2011 and bringing total assets under management to $170.2 billion.
Carlyle, which completed a $671 million initial public offering in May 2012, declared a quarterly distribution of 85 cents per common unit.