BlackRock misses earnings estimates and pulls hires after market turmoil

July 15 (Reuters) – BlackRock Inc (BLK.N) said on Friday it was tightening its belt and postponing some hiring amid an economic environment that spooked retail investors and dragged down its quarterly profit.

The world’s largest asset manager said total spending is expected to end 2022 with 15% growth, the bottom of previously announced forecasts. He is postponing senior hires to next year and bringing more junior employees into certain roles, noting that he is trying to “juniorize” a number of roles where appropriate.

“We are aware of the current environment and you are proactively managing the pace of what I would call some of our discretionary investments,” Chief Financial Officer Gary Schedlin told analysts on a call.

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BlackRock said general and administrative expenses were up 12% year-over-year partly due to costs associated with returning to the office, such as higher technology costs and health and safety costs.

BlackRock’s adjusted profit fell to $1.12 billion, or $7.36 per share, for the three months ended June 30, from $1.61 billion, or $10.45 per share, a year earlier. It missed an average analyst estimate of $7.90 per share, according to IBES data from Refinitiv.

Spooked by the withdrawal of assets, retail investors withdrew about $10 billion in the quarter, BlackRock showed, the first drop since the pandemic began in March 2020. The company said that although gross sales mutual fund companies remained strong, there were strong redemptions in long-term fixed income, high yield and growth securities.

Still, the company attracted $89.6 billion in total net customer inflow.

Regarding the recent collapse of crypto assets, BlackRock said that it will continue to explore digital assets. “The crypto asset market has seen a sharp drop in valuations over the past few months. But we are still seeing more interest from institutional clients in how to access these assets efficiently,” the director said. General Larry Fink.

BlackRock’s assets under management (AUM) fell 11% to $8.49 trillion from a year ago, well below the $10 trillion mark in the fourth quarter of 2021, and also affected by a stronger dollar.

“Investors are simultaneously navigating high inflation, rising rates and the worst start to the year for stocks and bonds in half a century,” Fink said, adding that global businesses are also facing the impact. the appreciation of the dollar on their profits.

The current macroeconomic environment, marked by concerns about soaring inflation, geopolitical turmoil and rate hikes, has only added to the pressures on fund managers, as much of their business depends on market conditions.

Fink said customers are increasingly turning to cash as a safe haven. “Now an inverted yield curve has made cash not only a safer place, but now also a more profitable place for investors,” the CEO told analysts.

BlackRock’s revenue in the quarter fell 6% to $4.53 billion, also missing analysts’ estimate.

“As expected, revenue and EPS were weak compared to recent quarters, proving that even BLK is not immune to a market downturn,” said Kyle Sanders, senior research analyst at shares in Edward Jones.

Shares of BlackRock, which have lost nearly 36% so far this year, were roughly flat in morning trading.

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Reporting by Manya Saini in Bengaluru and Carolina Mandl in New York; Editing by Megan Davies, Shinjini Ganguli, Louise Heavens and Jonathan Oatis

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