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Seagram's 2nd-Quarter Results Plunge : Earnings: The firm's net income falls 60% due to the sale of its DuPont stake to buy into MCA.

August 31, 1995|From Times Wire Services

Seagram Co.'s second-quarter earnings fell 60%, mostly because of the distiller's sale of its stake in DuPont to buy 80% of the entertainment company MCA Inc.

Net income totaled $89 million, or 24 cents a share, compared to $224 million, or 60 cents a share, in the 1994 second quarter, the Montreal-based company said Wednesday.

In April, Seagram sold its 24.2% stake in DuPont Co. for $8.8 billion to raise money to buy the stake in MCA. Chemical company DuPont had contributed up to 70% of Seagram's earnings.

The distiller said that both MCA and the Dole Food's fruit juice business, which it acquired in May, added to second-quarter profit. But the gains were not enough to make up for the loss of DuPont earnings.

Earnings from its stakes in MCA and Dole and from its core spirits and beverage businesses, minus interest, taxes and acquisition-related expenses, totaled $281 million on revenue of $1.88 billion. Seagram said the figure accurately reflects operational performance.

The numbers compare to $194 million in net income on revenue of $1.4 billion in the year-earlier period.

The results were below analysts' expectations of 31 cents a share, as compiled by Zacks Investment Research Co.

Seagram said its share of MCA's revenue totaled $365 million in the quarter. MCA businesses include a motion picture group, the USA Network, Cineplex Odeon movie theaters, Geffen Records and the Universal Studios theme parks.

Revenue from the Dole juice business and wine and spirits businesses totaled $1.65 billion. Seagram markets such brands as Tropicana orange juice and Chivas Regal.

In the first six months, net income was $3.4 billion, or $9.07 a share, compared to $346 million, or 93 cents per share, in last year's first half.

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Volkswagen, citing efforts to cut costs and increase foreign demand, reported a first-half profit of $76 million, contrasted with a loss in the same period a year ago.

The news comes as Volkswagen, the biggest German auto maker, is in the midst of contract talks with workers resisting cuts in overtime pay.

The company said that despite the improvement in income, the strength of the German mark had cut into earnings.

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