Franklin Resources Profit Slips on Bigger Tax Hit


By Michael Calia

Franklin Resources Inc. ( BEN ) said its fiscal second-quarter profit declined slightly as an increase in income tax helped offset revenue growth.

Earnings were in line with analysts' expectations, while the top line fell slightly below views.

The mutual fund company, which operates as Franklin Templeton Investments, ended the period with $886.9 billion in client assets under management, rising from $879.1 billion at the end of the fiscal first quarter. The increase was driven mainly by $15.9 billion in market appreciation, which was partially offset by $7.1 billion in outflows.

Overall, Franklin posted a profit of $561 million, or 89 cents a share, down from $572.8 million, or 90 cents a share, a year earlier. Income taxes for the most recent period grew 7.8% from a year earlier to $238.8 million.

Operating revenue rose 4.1% to $2.1 billion, while investment management fees grew 7.9% to $1.37 billion. Sales and distribution fees slipped less than 1% to $638.6 million.

Analysts polled by Thomson Reuters had projected earnings of 89 cents a share and revenue of $2.11 billion.

Operating margin widened to 37.5% from 36.2%.

The company said it repurchased $178.8 million worth of shares in the period.

Shares of Franklin Resources were down 1.5% to $52 in premarket trading.

Write to Michael Calia at michael.calia@wsj.com

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  04-28-140905ET
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