Salomon Profit Off 7.9%; Morgan Stanley Rises 53%

Salomon Inc., a major securities firm, said its third-quarter profit declined 7.9% from a year ago because of lackluster results in its commodities operations.

Morgan Stanley Group, a smaller investment company, said its profit soared 53% on a same-sized revenue gain, despite volatile securities and foreign exchange markets.

New York-based Salomon said its third-quarter earnings dropped to $128 million from $139 million a year ago.

Revenue for the three months fell 27.7% to $5.05 billion from $6.985 billion.

John Gutfreund, Salomon’s chairman and chief executive, said overall profits were “constrained by lackluster results for the commodities operations.”

Operations at Salomon’s Phibro Energy unit returned to modest profitability of $3 million in the quarter from a loss of $8 million in the preceding three months, while its Philipp Bros. commodities business incurred a loss of $6 million and commercial finance earnings were $41 million.

Morgan Stanley, which is also based in New York, said its net income for the three months ended Sept. 30 came to $39.5 million, compared to $25.8 million a year earlier.

Revenue for the quarter increased to $329.7 million from $216.2 million.

“The third quarter was marked by periods of volatility and high volume in the securities and exchange markets, and we are pleased with the ability of our global sales and trading organization, supported by our operations capabilities, to produce these results,” Chairman S. Parker Gilbert said.

The company’s investment banking performance was strong, especially in the area of major corporate restructurings, Gilbert said.