NEW YORK, Feb 8 – Moody’s Corp net income fell 30 per cent in the fourth quarter, missing Wall Street estimates, as expenses rose and companies backed away from issuing bonds during the European debt crisis.
Net income declined to US$96.2 million, or 43 cents per share, from US$137.4 million, or 58 cents a share, a year earlier, the credit rating and financial research company said today.
The average estimate from six analysts surveyed by Thomson Reuters I/B/E/S was 49 cents a share.
Fourth-quarter expenses rose 7 per cent, which the company said was primarily due to employing more people and spending more on technology to grow.
Global revenue for ratings declined 4 per cent, driven by a 14 per cent drop in corporate finance.
Revenue at ratings competitor Standard & Poor’s fell 8 per cent in the quarter, the agency’s parent, McGraw-Hill Cos Inc , reported on Jan. 31.
Moody’s Analytics business, which sells financial research, risk management tools and consulting services, worked to offset the decline in ratings. Analytics revenue increased 10 per cent in the quarter and made up 35 per cent of the corporate total.
Moody’s projected that 2012 revenue from the analytics business would increase by a percentage “in the high teens,” and that ratings revenue would rise “in the mid-single-digit percentage range.”
Chief Executive Officer Raymond McDaniel predicted late last year that the financial markets would improve and that companies would issue more bonds.
The company projected a 2012 profit of US$2.62 to US$2.72 a share, which would be up about 5 per cent to 9 per cent from US$2.49 in 2011.
The year-ago period included 8 cents a share of tax benefits. The provision for income taxes increased in the quarter by US$24 million, and the effective tax rate rose to 37 per cent from 19.5 per cent.
The company said it did not continue buying back shares in the fourth quarter, but issued stock for employee pay. Outstanding shares were down 4 per cent at the end of December from a year earlier.
Shares of the rating agency were off 14 cents to US$45.81 in morning trading on the New York Stock Exchange. – Reuters
