Apollo Global Management reported on Thursday that its third-quarter profit declined sharply, weighed down by a loss in its private equity business.
Apollo said its quarterly economic net income after taxes fell 91 percent, to $48 million, from the period a year earlier. Economic net income is a nonstandard profit measure that includes unrealized investment gains or losses.
Apollo’s earnings translated to 12 cents a share, falling short of the average estimate of 38 cents a share among analysts surveyed by Thomson Reuters.
The disappointing performance stemmed from Apollo’s private equity business, which recorded a net loss in unrealized carried interest, or the share of profit that Apollo gets from managing its funds. These funds depreciated by roughly 2 percent during the quarter, compared with a gain of 18 percent in the third quarter of 2013.
The private equity segment reported an economic net loss of $23.1 million, compared with economic net income of $538.5 million in the period a year earlier.
While its unrealized performance proved lackluster, Apollo continued to realize cash profits from selling its investments. With stock markets relatively buoyant, the private equity business sold shares in companies it had previously taken public, including the industrial parts maker Rexnord and the grocery chain Sprouts Farmers Market.
These sales and others in Apollo’s credit business helped generate distributable earnings – a measure reflecting cash that can be given to shareholders – of $342.7 million, 25 percent lower than in the period a year earlier. Apollo declared a dividend of 73 cents a share.
Apollo raises capital from pension funds and other institutional investors to make deals. Leon D. Black, the chairman and chief executive, said Apollo distributed nearly $4.6 billion to these investors in its funds during the third quarter.
Apollo reported assets under management of $163.9 billion as of Sept. 30, compared with $112.7 billion on Sept. 30, 2013.
“We sustained our pace of significant realization activity,” Mr. Black said in a statement. “In the current market environment, we continue to leverage Apollo’s integrated global platform to raise and deploy capital across all of our businesses, while maintaining our strong investment performance.”
Apollo and its rivals prefer to use nonstandard metrics to report results. According to generally accepted accounting principles, Apollo reported net income of $2.2 million, compared with $192.5 million in the period a year earlier.