A combination of strong drug sales and increased profits from a videotape subsidiary helped boost Bergen Brunswig Corp.'s net earnings by 52% to $13.5 million for the company's fiscal 1989 third quarter, compared to $8.9 million in the year-earlier period.
Orange-based Bergen Brunswig, a distributor of health service and consumer electronics products, had revenue of $858.3 million for the quarter ended May 31, up 11.5% from $769.6 million.
For the first nine months of this year, Bergen Brunswig's net earnings were $36.9 million, up 37% compared to $27 million in the same period a year ago. Revenue for the period increased 14% to $2.5 billion from $2.2 billion.
The size of the increase, which industry analysts considered a mild and pleasant surprise, helped send the price of Bergen Brunswig stock to a 12-month high Wednesday, with shares closing at $30.375 each, up $1 per share in unusually heavy trading of 286,000 shares on the American Stock Exchange.
"Their business has been strong for some time, but the sales were particularly impressive during the quarter," said John McRae, an analyst at Bear Stearns & Co. in New York. McRae and most industry analysts had been been projecting that Bergen Brunswig would earn about $56.3 million for all of fiscal 1989, but on news of the latest earnings, McRae increased his estimate to about $59 million.
McRae said that prospects are particularly bright for the company's drug distribution business as Bergen Brunswig continues to add highly automated warehouses to its inventory system.
He said he also expects the company's videotape-distribution business to do well, particularly when the hit movies "Rain Man" and "Who Framed Roger Rabbit" are released on tape in late August and early in the company's fiscal 1990, respectively.
Bergen Brunswig's Commtron subsidiary, the nation's largest distributor of prerecorded videocassettes, had earnings of $1.6 million during the quarter, a 75% jump over the year-earlier period, while revenue increased 5% to $129 million. The company said that improved gross margins and the opening of new video rental stores boosted performance.