THE TIMES 100 : The Best Performing Companies in California : INDUSTRY REPORT : Few Sectors Are Left Unscathed in a Slow Year A

For most of California’s industrial sectors, 1990 was a year to forget.

Income slid in five of eight sectors as the Persian Gulf crisis intensified, the U.S. recession loomed larger and consumer uncertainty increased.

“In terms of overall performance, it was a slow year compared with the previous years, no question about that,” said Richard Ayer, first vice president and economist at Security Pacific Corp.

According to a survey of 619 public companies prepared for The Times by MZ Group of San Francisco, the big loser was the entertainment and leisure sector, a broad category encompassing the movie studios, newspapers, theme parks, hotels and casinos. In that sector, total income was down 22.2% to $984 million in 1990 from $1.26 billion in 1989.

In particular, Los Angeles-based Caesars World Inc. saw income drop to $36.8 million in 1990 from $66.9 million the year before. The company blamed competition from new hotels such as the Mirage in Las Vegas; slumping activity in its Atlantic City, N.J., casinos because of the economic downturn in the Northeast, and the cost of capital improvements at its flagship Caesars Palace resort.

Among media companies, Times Mirror Co., publisher of the Los Angeles Times, saw profit drop to $180.5 million in 1990 from $298 million in 1989, because of slackening demand for advertising.

Similarly, in television, troubled Financial News Network reported a loss of $69.3 million in 1990, contrasted with a slim profit of $6.5 million the year before.

But extraordinary movements in the earnings of a few companies skewed the results in some sectors, giving a false impression of health on the one hand and an illusion of weakness on the other.

Take the energy sector. The Times’ survey showed a decline of 10.7% in total income, to $2.79 billion from $3.12 billion in 1989. But the bulk of that movement was attributable to the massive net loss at Los Angeles-based Occidental Petroleum Corp., which reported a $1.68-billion loss in 1990, in contrast with its $256-million gain the year before, not counting extraordinary items.

Occidental’s loss reflected the massive, $2-billion cost of a major restructuring after the death of its patriarch, Armand Hammer. Analysts hailed the restructuring as an effort to push the company closer to financial strength.

Without Occidental, the energy sector actually saw income grow, attributable mainly to soaring oil prices in the fourth quarter from the Persian Gulf crisis. In particular, San Francisco-based Chevron Corp. reported robust earnings, up to $2.16 billion in 1990 from $251 million in 1989.

By contrast, the beleaguered aerospace and defense sector of the state’s economy actually showed the highest income growth of any sector in the survey, with total earnings up 32.5% to $1.41 billion from $1.06 billion in 1989.

But the improvement was really only relative, analysts said. The previous year’s earnings were low, reflecting cuts in the defense budget and the effects of fixed-price defense contracts, which put the burden of cost overruns squarely on a company’s books.

“It was a year of recovery,” said Michael Lauer, an analyst with Kidder, Peabody & Co. in New York.

The improvement also largely reflected the experience of two companies, Lockheed Corp. and Northrop Corp. Lockheed’s profit jumped to $335 million in 1990 from $6 million in 1989, showing the benefits of corporate cost-cutting.

Similarly, Northrop showed income up to $210.4 million in 1990, in contrast with a loss of $80.5 million in 1989. The improvement resulted in part from successful companywide cost-cutting and managerial restructuring in 1989.

Those companies aside, companies in the sector posted declines in income. Most notably, Rockwell International Corp. reported income down for the third year in a row, to $624.3 million from $734.9 million in 1989.

In other areas, financial services overall saw a 2% decline in income to $2.84 billion from $2.9 billion a year earlier. As a sign of continuing trouble among thrifts hit with problem loans in commercial real estate, CalFed Inc. reported a $221.9-million loss in 1990, in contrast with a gain of $82.4 million in 1989.

First Executive Corp., whose California and New York insurance units were seized by state regulators this month, narrowed its losses in 1990, to $366 million from $831.4 million in 1989.

BankAmerica Corp.’s earnings, however, ran counter to the downward trend in 1990. Higher service charges on its deposit accounts and higher interest income pushed earnings up to $877 million from $820 million the year before.

In the sector comprising miscellaneous service industries, income was down sharply, by 20.8% to $3.05 billion in 1990 from $3.85 billion in 1989. Pacific Telesis Group was one of the big losers, mainly because of a recession-influenced fall in its market for telephone and information services. Pactel’s income dropped to $1.03 billion from $1.24 billion the year before.

The soft economy also contributed to the losses at trucking firm Consolidated Freightways. The company reported a loss of $40.1 million in 1990, in contrast with a gain of $8.6 million in 1989.

Elsewhere, the retail sector reported income up 6.2% to $415.2 million from $390.9 million, in part a result of growth at Vons Cos., Safeway Inc. and Gap Inc. That expansion offset the fall in profit at debt-ridden Carter Hawley Hale Stores, the retail giant that sought bankruptcy protection in February.

Utilites saw income fall 6.2%, to $2.01 billion from $2.15 billion in 1989.