Economy Still Hurting Profits : Trends: More than half of the area’s 49 public companies had poorer results last quarter. Among the hardest-hit industries were banking and real estate.
The sluggish economy continued to inflict pain on local businesses as more than half the companies in the area posted poorer results in their latest quarters.
Of 49 public companies that have reported results for quarters that ended in July through early October, only 23 increased their profits, or turned profitable after posting losses a year earlier. The companies surveyed are headquartered in the San Fernando Valley and Ventura County region.
Losses were reported by 11 companies, and particularly significant is that all but one of those results were worse than a year ago, as they either followed year-earlier profits, or had heavier losses. Another 15 companies saw their profits shrink. Among the industries hardest hit were banks, real estate and computers.
Despite the tough business environment, some companies managed to show sizable profit gains.
The biggest earnings growth among local companies was at Amgen Inc., a Thousand Oaks biotechnology concern that is reaping the rewards of its two hot-selling drugs. In the quarter that ended Sept. 30, Amgen’s profit more than tripled to $49.4 million from $14.3 million a year earlier, while its revenues surged to $178.6 million from $78.8 million.
Amgen’s growing profits are tied to sales of its Epogen anti-anemia drug, which jumped to $112.2 million in the quarter from $73 million a year before. The company also sold $59.7 million worth of its recently introduced infection-fighting drug, Neupogen.
Some other regional companies posting stronger results were helped by cuts in overhead costs.
A notable example is Cherokee Inc., a Sunland maker of casual clothes and shoes that reported a profit of $64,000 in the quarter that ended Aug. 31, compared with a loss of $108,000 in the same period in 1990. The turnaround, which the company attributed to cost-cutting and improvement in its shoe division, came despite a 14% decline in revenues to $53.8 million and a depressed retail environment generally.
Another strong performer was 20th Century Industries, the Woodland Hills-based parent of 20th Century Insurance, which benefited from an increase in the number of cars and homes it insures. 20th Century’s profit rose 24% to $33.5 million from $27 million a year earlier. Net premiums written--the insurance industry equivalent of revenues--increased 15% to $212 million.
But Transamerica Insurance Co. in Woodland Hills saw its profit edge down to $13.9 million from $14 million, while revenues fell 4% to $512.9 million. The company said its workers’ compensation and specialty personnel premiums were lower in the latest quarter, while entertainment insurance and discontinued lines of insurance had larger-than-expected losses.
Health-care companies also showed mixed results.
Summit Health Ltd., a Burbank operator of hospitals and other health-care facilities, said its profit for the quarter that ended Sept. 30 jumped 50% to $2.46 million, while revenues rose 14% to $106.1 million. The company attributed the earnings increase to growth in its outpatient and long-term care business.
However, Nu-Med Inc., an Encino operator of psychiatric hospitals and acute-care centers, lost $770,000 in its quarter that ended July 31, compared with a $958,000 profit a year earlier. Revenue dropped 55% to $30.1 million. The company said the overall loss was due to losses at one of its acute-care hospitals, which it did not identify.
Meanwhile, the slow economy has battered local banks, most of which attributed their problems to the need to bolster their reserves against possible loan losses, as well as lower interest rates.
CU Bancorp in Encino, the parent of California United Bank, has for years produced steadily increasing profits by making loans to small- and medium-sized companies. But because of larger loan-loss reserves, CU said it expects to report a loss for the third quarter that ended Sept. 30, and post its first annual loss since it was founded in 1982.
Among local savings and loans, Citadel Holding Corp., the Glendale-based parent of Fidelity Federal Bank, reported a $32.7-million loss for its third quarter that ended Sept. 20. A year earlier, Citadel earned $4.86 million. The thrift-holding company said the loss was largely due to a big increase in its loan-loss reserves.
The region’s three largest public companies all reported lower profits in their latest quarters.
Giant food and real estate concern Dole Food Co., blaming lower banana prices and operating losses from its new resort properties in Hawaii, said earnings plunged 41% to $25.8 million in the quarter that ended Oct. 5, from $44 million a year earlier. Revenues for the Westlake Village company edged up 2% to $898.3 million.
Walt Disney Co.’s earnings for the quarter that ended Sept. 30 fell 31% to $165.5 million from $238.4 million, while revenues inched down 2% to $1.5 billion. Disney said the results reflected the recession, slow domestic and international travel to its theme parks and disappointing box-office returns.
And a higher tax rate caused Lockheed Corp.’s profit for the quarter that ended Sept. 30 to decline 6% to $81 million from $86 million, while revenues increased 3% to $2.4 billion.
The slumping real estate market hurt Newhall Land & Farming Co., the big Valencia-based developer. Newhall’s profit for the quarter that ended Sept. 30 plummeted 78% to $1.85 million from $8.57 million a year earlier, while revenues dropped 49% to $24.6 million.
Many regional technology companies have also suffered, including Micropolis Corp., a Chatsworth maker of computer disk drives that lost $3.76 million in the quarter that ended Sept. 27, versus a year-earlier profit of $2.88 million. Micropolis, which blamed the loss on declining orders from computer companies, also saw its revenues slide 26% to $73.5 million.
Quarterly Profits
For publicly held companies with headquarters from Ventura to Glendale. Figures are for fiscal quarters ended during July to early October.
Company Industry Profit (Loss) % Change* Amgen Biotechnology $49.4 million +245% Cherokee Apparel $64,000 N/A Citadel Holding Savings & Loan ($32.7 million) N/A Walt Disney Entertainment $165.5 million -31% Dole Food Food Products $25.8 million -41% K-Swiss Athletic Shoes $3.41 million +10% Lockheed Aerospace $81 million -6% Micropolis Disk Drives ($3.76 million) N/A Newhall Land Real Estate $1.85 million -78% Summit Health Hospitals $2.46 million +50% Transamerica Insurance $13.9 million -1% 20th Century Insurance $33.5 million +24%
* Compared with the year-earlier quarter
N/A: Not applicable for comparison due to current or year-earlier losses
