Inventory Controls Push Bergen Brunswig Profits Up

Bergen Brunswig Corp., the third-largest U.S. drug wholesaler, said Tuesday its second-quarter profit rose 34% as it improved its inventory controls.

Orange-based Bergen Brunswig said net income rose to $38.4 million, or 35 cents a share, from $28.6 million, or 28 cents a share, a year earlier. It was expected to earn 34 cents, the average estimate of analysts polled by First Call Corp.

Revenue rose 28% to $4.3 billion from $3.4 billion.

The company has been able to increase earnings by improving the control of its inventory of pharmaceuticals and medical supplies. It has benefited from opening several automated distribution sites around the country, analysts said.

“It’s given them a low-cost way to control inventory, and it’s really paying off for the company now,” said Christopher McFadden, a First Union Capital market analyst with a “buy” rating on Bergen Brunswig. The company is also on First Union Capital’s “analyst action” list of most recommended stocks.

Revenue from Bergen Brunswig’s wholesale drug unit rose 24%. That’s impressive, said Kristi Thiese, a Raymond James analyst with a “buy” rating on the company, because the entire wholesale drug market only grew 15% during the same period, she said.

The year-earlier profit excludes a charge of $9.8 million, or 10 cents a share, related to the attempted acquisition of Bergen Brunswig by Cardinal Health Inc. The companies abandoned the deal after federal regulators raised antitrust objections.

Bergen Brunswig shares rose 6 cents to $21.06.