KKR profits fall 27pc as income stalls

PRIVATE equity group KKR said it suffered a more than 27 per cent drop in quarterly profits yesterday, compared with the same period in 2010, as its investments brought in less income.

KKR, which held assets of $61.9bn (£38bn) under management at the end of June, said it made $315m economic net income in its second quarter, down from $433m in 2010.

That loss was softened dramatically in its half-year result, which showed economic net income of $1.06bn, just 4.5 per cent down on 2010.

KKR said the profit fall was “due to a lower level of investment income earned from our principal investments”, which saw lower appreciation than in 2010.

But it claimed its investee companies had outperformed the Standard & Poor’s 500 US stock index and said business had held up despite a difficult global climate.

“In an increasingly challenged global economic environment, our business continued its growth trajectory across all segments,” co-founders Henry Kravis and George Roberts said in a statement. “Activity has been particularly robust despite the market volatility.”

KKR’s NYSE-listed shares closed more than four per cent lower after it said its net quarterly profit for the quarter was $0.36 per share, below analyst expectations for $0.41 per share. It made $0.48 per share in the same quarter in 2010.

Its performance also diverged from its major rival Blackstone, which delivered a forecast-beating $86.2m profit for its second quarter, up from a loss of $193.3m in the second quarter of 2010.

KKR’s funds under management rose almost 14 per cent compared with June 2010.