Goldman Sachs’ Profit Climbs 23%
Goldman Sachs Group said Wednesday that its fiscal second-quarter earnings rose 23%, as the investment bank allowed its traders to make riskier bets.
Goldman also said it more than doubled its quarterly dividend in response to new legislation that reduces taxes for investors on companies’ dividends.
The firm’s net income for the quarter ended May 30 easily topped Wall Street estimates, rising to $695 million, or $1.36 a share, from $563 million, or $1.06, a year earlier.
Surging income from fixed-income trading has helped Goldman and its rivals offset weak investment banking and equities business. But Goldman has been less conservative than its competitors, raising its risk threshold in the latest quarter to its highest level since the company went public in 2000.
Goldman’s results surpassed the average estimate of $1.19 a share from analysts polled by Thomson First Call, but its share price fell as a major offering of its stocks and options were set to become eligible for sale today.
Goldman shares fell $1.82, to $84.78, on the New York Stock Exchange.
Revenue rose 3.6% to $3.99 billion. Revenue from trading fixed-income securities, currencies and commodities was $1.59 billion, up 39% from a year earlier.
The board increased its quarterly dividend to 25 cents a share from 12 cents.
In other earnings news Wednesday:
* Carnival Corp. said fiscal second-quarter profit fell 24% to $127.8 million, or 19 cents a share, and said profit for the rest of the year wouldn’t meet analysts’ forecast because of weak bookings during the war in Iraq.
The outbreak of severe acute respiratory syndrome, terror attacks in Saudi Arabia and Morocco and viruses on cruise ships also hurt business and left U.S. travelers reluctant to take trips to Europe, Carnival said.
The company said it sees earnings per share of 83 cents to 87 cents for its fiscal third quarter, less than the Thomson First Call forecast of 93 cents a share. In its fiscal fourth quarter, the company sees earnings of 24 cents to 28 cents a share, less than the consensus of 32 cents. Carnival shares fell $1.01 to $31 on the NYSE.
* General Mills Inc. said fiscal fourth-quarter profit nearly quadrupled, to $225 million, or 59 cents a share, helped by sales of yogurt, new products such as Berry Burst Cheerios and lower costs related to its 2001 purchase of frozen foods maker Pillsbury.
Sales rose 10% to $2.55 billion. Strong results in yogurt helped offset weakness in food service and a general slowdown in sales of food consumed away from home. General Mills shares rose 17 cents to $47.80 on the NYSE.
