Tyco profits soar
TRENTON, N.J. (AP) – Industrial conglomerate Tyco International Ltd. said its profit soared more than five-fold in its second quarter due to lower one-time charges and overhead, higher revenues and substantial jumps in operating income in its four biggest segments. The West Windsor-based maker of health care, fire and security, electronics and engineered products, best known for its ADT Security Services, also boosted its earnings forecast for the year. Its shares jumped nearly 4 percent in morning trading Tuesday.
Tyco said it earned $782.4 million, or 37 cents per share, for the January-March period. That was up from $124.3 million, or 6 cents per share, a year ago when it absorbed $473 million in one-time charges.
Excluding one-time charges of 4 cents per share in the latest quarter, Tyco would have earned 41 cents per share. That beat by 5 cents the 36 cent-per-share forecast of analysts surveyed by Thomson First Call.
“This is a dramatic change from where we were in early 2003,” Dave Fitzpatrick, chief financial officer, told analysts during a morning conference call.
Tyco said revenues for the quarter totaled $10.04 billion, up nearly 12 percent from $8.99 billion a year earlier. More than 8 percent of that increase, however, was from favorable foreign currency exchange rates.
Tyco’s engineered products and services division posted a 32 percent jump in revenues, to $1.45 billion, and the fire and security, health care and electronics divisions each saw revenues and net income increase at least 7 percent.
The health care division boosted operating income 25 percent to $580.6 million.
The worst-performing division, plastics and adhesives, saw revenues fall 4 percent to $470.1 million because of a “homeland security-related spike on duct tape and plastic” sales a year earlier, Fitzpatrick said.
Tyco raised its earnings guidance for its 2004 fiscal year, to $1.52 to $1.58 per share, up from $1.42 to $1.52 per share. Analysts were expecting $1.51 per share.
“I’m pleased with the progress we are making in our efforts to build Tyco into a world-class operating company,” Ed Breen, chairman and chief executive, told analysts. “We are still in the early innings, but we are gaining traction.”
Breen said the company has been benefiting from an improving global economy, while cutting costs, boosting efficiencies, improving cash flow and continuing to pay down Tyco’s substantial debt.
Breen’s predecessor, L. Dennis Koslowski, had run Tyco as a loosely organized acquisitions machine, and the company had about $24 billion in debt when he was forced out; Koslowski’s six-month trial on theft and other charges ended in a mistrial last month.
Breen said net debt now stands at $14.6 billion after paying down $1.2 billion in the quarter, and cash flow from operating activities rose to $1.8 billion from $1.4 billion a year ago.
Since the company announced a major restructuring program last November, it has eliminated about 4,100 of its 260,000 jobs, closed 110 facilities and exited 10 of the 50-plus businesses targeted for divestiture.
Breen said the company already has generated more than $100 million in proceeds from divestitures and is on track to generate $400 million this year. He said efforts to cut supply costs and to boost efficiency should generate $300 million and $200 million, respectively, this year.
For the first six months, net income more than doubled, to $1.5 billion, or 70 cents per share, from $710.2 million, or 35 cents per share. Revenues jumped 11 percent to $19.9 billion from $17.9 billion a year earlier.
Tyco shares rose $1.03, or 3.7 percent, to $29.01 in morning trading on the New York Stock Exchange.
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On the Net: http://www.tyco.com
AP-ES-05-04-04 1104EDT