Ratings agency Moody's Corp (NYSE:MCO) said Wednesday that fourth-quarter net income fell 30 percent as expenses rose and companies backed away from issuing bonds during the European debt crisis, hurting a key business segment.
For the three months that ended December 31, net income declined to $96.2 million, or 43 cents per share, from $137.4 million, or 58 cents per share, a year earlier.
The average estimate from six analysts surveyed by Thomson Reuters was for earnings of 49 cents per share.
Revenue of $567.1 million for the fourth quarter was flat as compared to the fourth quarter of 2010.
Moody's chairman and chief executive officer, Raymond McDaniel, said: "Moody's achieved strong performance for full-year 2011, with growth in all lines of business at both Moody's Investors Service and Moody's Analytics despite volatile business conditions.
"For 2012, we anticipate revenue growth across most areas of our business and earnings per share in the range of $2.62 to $2.72."
Fourth-quarter expenses rose seven percent, which the company said was primarily due to employing more people and spending more on technology to grow.
Ratings revenue declined four percent, driven by a 14 percent drop in corporate finance.
Revenue at ratings competitor Standard & Poor's, a unit of The McGraw-Hill Cos. (NYSE:MHP), fell eight percent in the fourth quarter.
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 percent in the quarter, and made up 35 percent 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".
CEO 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 $2.62 to $2.72 per share, which would be up about five to nine percent from $2.49 in 2011.
The year-ago period included eight cents per share of tax benefits. The provision for income taxes increased in the quarter by $24 million, and the effective tax rate rose to 37 percent from 19.5 percent.
The company said it did not continue buying back shares in the fourth quarter, but issued stock for employee pay.