Profits Tumble at Phillips and Tenneco in Quarter
Phillips Petroleum, citing the cost of a restructuring it undertook to escape from two hostile takeover bids, said earnings tumbled 45.1% in the first quarter of 1985 from a year earlier.
Tenneco, a diversified energy company, said its profit plunged 59.4%, due largely to a 75-day shutdown of production at its J I Case Co. subsidiary, a move aimed at reducing excess dealer inventories of farm equipment. The company predicted that Case, which purchased International Harvester Co.’s farm-equipment business late last year, would turn a profit by the end of 1985.
Phillips, the nation’s eighth-largest oil company, said its first-quarter profit fell to $106 million from $193 million. Revenue edged up 1.5%, however, to $4.02 billion from $3.96 billion.
William C. Douce, Phillips’ chairman, said earnings were reduced by $40 million for expenses related to a restructuring of the company that was developed to settle separate takeover attempts by Texas oilman T. Boone Pickens Jr. and financier Carl C. Icahn.
Phillips borrowed $4.5 billion to buy back nearly half of its stock and agreed to sell $2 billion of its assets to help reduce the new debt load.
Phillips said it realized $26 million after taxes from the March 1 sale of its interest in the Union Island gas field in California. Douce said that earnings from the production of oil and natural gas rose $38 million in the first quarter but that profits fell $53 million from the sale of refined petroleum products.
Tenneco, the 11th-largest oil company, said profits fell to $63 million from $155 million. Revenue fell 4.1% to $3.72 billion from $3.88 billion.
“The decline was expected and due largely to the shutdown of J I Case North American manufacturing facilities for most of the first quarter,” said J. L. Ketelsen, Tenneco’s chairman.
Last year, after Case acquired International Harvester’s loss-plagued farm-equipment business for $430 million, it announced plans for production cutbacks to bring dealer inventories in line with sales volumes in the depressed industry.
