Blackstone Group, the manager of the world’s biggest buy-out fund, suffered a 90 per cent drop in profit during the fourth quarter and warned that conditions would remain difficult for the rest of this year or longer.

The fall in “economic net income”, from $808m to $88m, was slightly worse than analysts expected. Under US accounting principles, which include compensation costs relating to Blackstone’s initial public offering last year, the company reported a $170m loss, a reversal from the $1.18bn profit of a year earlier.