Most Companies in Area Report Rising Earnings in 1st 3 Months of 1986
Nearly two-thirds of the leading publicly held companies based in the San Fernando Valley area reported upturns in the first three months of 1986, with most showing either big earnings gains or strong recoveries from losses in the same period a year ago.
A survey of 50 Valley firms showed that 17, including most of the largest companies, posted earnings increases of 25% or more during their most recently completed quarters. Nine firms bounced back with profits after posting losses in the same quarter a year earlier, and four had slight increases in earnings.
Ten companies posted lower earnings, and another 10 lost money. Most of those, however, are among the smallest publicly held firms in the area, which extends from Burbank to Camarillo. The survey included earnings for fiscal quarters ended in March only.
Profit increases were particularly strong among entertainment and financial-services companies. The weakest showings came from small electronics and computer-related companies.
Even so, some of the area’s high-technology companies that recorded losses last year, notably Dataproducts in Woodland Hills and Tandon in Chatsworth, showed strong profits. That occurred partly because they have finished writing off effects of outmoded inventories, plant closings and layoffs.
Tandon, which sells disk drives and personal computers, posted a profit of $1.9 million after recording a loss of $19.9 million a year ago. Dataproducts, which makes computer printers, said its profit rose 113%, to $5.5 million. It credited the benefits of its extensive cost-cutting last year.
Chatsworth-based Micropolis, a rapidly growing maker of high-capacity disk drives, posted a $3.8-million profit, up from a loss of $411,000 a year ago, as sales more than tripled to $50.7 million.
Micom Systems, another of the area’s largest high-technology firms, reported a 72% drop in profit to $1.6 million. The Simi Valley company, which makes computer communications equipment, attributed the drop to costs of expanding its sales force and launching new products.
Newbury Park-based Amgen, a biotechnology concern, earned $205,000 in its most recent quarter, after losing $1.7 million a year earlier. The quarterly earnings gave Amgen a yearlong profit of $548,000, the company’s first profitable year since it was founded in 1980.
The area’s two major entertainment firms, Walt Disney in Burbank and Universal City-based MCA, continued their string of strong profit increases. Disney, citing big gains from its theme parks, said its earnings rose 48%, to $51.8 million.
MCA’s earnings rose 68%, to $30.9 million, largely because of the performance of its filmed entertainment division, which released the Academy Award-winning film “Out of Africa” and last year’s top-grossing film, “Back to the Future.”
Lockheed, the Burbank-based aerospace concern that is the area’s largest company, reported that its net income inched up about 4%, to $87 million, while revenue rose about 5%, to $2.2 billion. Earnings were helped by a 22% reduction in long-term debt, to $142 million.
Quarterly Loss
Sierracin, a Sylmar-based aerospace and electronics company, reported a $99,000 quarterly loss, down from a $164,000 profit a year earlier. It blamed an unprofitable glass company it owns with a Japanese partner.
Three major insurance firms--Fairmont Financial in Burbank, Zenith National in Encino and 20th Century Industries in Woodland Hills--showed large profit increases largely because of big increases in the amount of premiums written. Fairmont’s profit increased 180% to $1.4 million; 20th Century’s was up 69%, to $6.8 million, and Zenith earned $3.1 million, up from a loss of $2.6 million the year before.
Amwest Insurance Group, a smaller firm based in Woodland Hills, reported a profit gain of 339%, to $439,123.
Most of the largest banks and savings and loans showed increased profit, in part because of the fattened spread between the interest they pay on deposits and receive from loans. Some of the increase, however, reflected weak profits last year.
Bank Profits
Valley Federal Savings, based in Van Nuys, posted a 296% increase, to $3.6 million. Encino Savings’ profit rose 356%, to $219,000.
The net income for Encino-based Independence Bank, the largest bank with headquarters in the Valley, was up 58%, to $416,000.
Olson Industries, the Sherman Oaks egg and packaging firm, showed a profit recently after a loss a year ago. It earned $1.7 million, up from a $37,000 loss a year earlier.
But two firms, Zero and American Ecology, which have recorded strong profit increases over the past few quarters, posted declines in the most recent period. American Ecology’s earnings fell 59%, to $700,000, in part because of delays in implementing laws governing low-level radioactive wastes. American Ecology is a waste-disposal firm.
Zero, which makes metal cases and cabinets for electronics equipment, said its profit fell 8% from a year earlier, to $3.1 million, although the decline was partly caused by an extraordinary gain the company enjoyed a year earlier.
Marantz, the Chatsworth home-electronics firm, said its quarterly loss widened to $1.3 million, from $983,000 a year ago, even though sales soared 120%, to $16.3 million. The company attributed the increased loss partly to the continued weakness of the dollar against the Japanese yen, which made its Japanese-assembled products more expensive in the United States. It also cited the impact of the bankruptcy filing by one of its major customers.
The most recent earnings reports from three of the Valley’s largest companies--Nu-Med, House of Fabrics and Redken--are for the fiscal quarter ended Jan. 31.
Nu-Med, an Encino-based hospital chain, said its earnings fell 49%, to $1.2 million. It blamed disruptive remodeling programs.
Sherman Oaks-based House of Fabrics, a fabrics retailer, said its profit fell nearly 66%, to $1.3 million, mostly because of a $2.1-million accounting adjustment taken in anticipation of the sale of its unprofitable Crafts Showcase unit.
Redken, a Canoga Park cosmetics firm, showed a profit decline of 94%, to $118,000, because of weak domestic sales, the costs from a new Kentucky factory and severance pay.
Two other major Valley companies, Computer Memories and TransTechnology, are expected shortly to report earnings for their most recently completed quarters.
QUARTERLY PROFITS
Results are for quarters ended in March.
Net Income Company (loss) % Change Dataproducts $5.5 million 113 Walt Disney 51.8 million 48 Fairmont 1.4 million 180 Independence Bank 416,000 58 Lockheed 87.0 million 4 MCA 30.9 million 68 Micom Systems 1.6 million -72 Micropolis 3.8 million NA Newhall Land 6.7 million 63 Olson Industries 1.7 million NA Sierracin (99,000) NA Superior 2.2 million 25 Tandon 1.9 million NA 20th Century 6.8 million 69 Valley Federal 3.6 million 296 Zenith National 3.1 million NA Zero 3.1 million -8
