Loews Profit Falls 76% After Attacks
Loews Corp., a conglomerate controlled by Laurence Tisch, said Thursday that its third-quarter profit slumped 76%, primarily because of a rise in claims at its CNA Financial Corp. insurance unit from the Sept. 11 terrorist attacks.
The New York-based company, which also owns Lorillard Tobacco Co., Diamond Offshore Drilling and hotel and tanker businesses, said net income fell to $165.7 million, or 85 cents a share, from $679.6 million, or $3.45, a year ago.
Results include CNA’s $304 million in claims from the attacks that destroyed the World Trade Center.
Although earnings growth at Lorillard helped make up some of the shortfall, some analysts predict the prospect for more setbacks at CNA, which is trying to make a turnaround amid losses from asbestos and pollution claims, might keep the insurer from benefiting as much as rivals from industrywide price increases.
Loews earned $120.6 million, or 62cents a share, excluding investment gains and losses, below the average analyst estimate of $1.02, according to a survey by Thomson Financial/First Call. Revenue fell 16% to $4.84 billion.
Profit at Lorillard, which makes Newport, True and other cigarettes, rose 15% to $229.9 million. Loews’ share of CNA’s net loss in the quarter was $133 million. Insurance premiums and net investment income fell 25% to $3.13billion, while sales from cigarettes and other manufactured products rose 9% to $1.24 billion.
Earnings from Lorillard, the fourth-largest tobacco company, accounted for about 70% of Loews’ earnings, versus a typical 50%.
Diamond Offshore Drilling earnings more than quadrupled to $22.7million, while hotel earnings fell 80% to $100,000.
Loews shares rose to close at $2.74 to $53.54 on the New York Stock Exchange.
Other earnings, excluding one-time items unless noted:
* Revlon Inc. said its third-quarter loss narrowed as it cut expenses by firing workers, closing plants and selling unprofitable businesses. The maker of Revlon and Almay cosmetics, Flex shampoo and other personal-care products said its loss from ongoing operations was $2.2million, or 4 cents a share, compared with a year-earlier loss of $13.1 million, or 25 cents. The results were far better than the 16-cent loss analysts expected.
Sales fell 5.1% to $327.2 million, a much larger drop than the 2% decline analysts had forecast.
* Wendy’s International Inc. said its third-quarter earnings rose 8% to $52 million, or 44 cents a share, driven by new restaurant openings and sales growth at its namesake hamburger chain and Tim Hortons coffee-and-doughnut chain. Sales grew 6% to $610 million. The company said the results, which matched analysts’ forecasts, were dampened by a slowing economy and higher beef costs.
