Jones Apparel Posts Increase in Q4 Earnings

Jones Apparel Q4 Earnings Higher; Mittal Steel's Q4 Profit Down; Yankee Candle Posts Drop in Profit; Credit Suisse Results Disappoint

Jones Apparel Q4 Earnings Higher

Jones Apparel Group Inc. (JNY) on Wednesday reported higher fourth-quarter earnings as the shoe and apparel maker benefited from demand for its Gloria Vanderbilt brand.

The designer of brands including Jones New York and Nine West reported net earnings of 48 cents per share, or $55.7 million, compared with 28 cents per share, or $34.1 million, for the fourth quarter of 2004.

The company in January agreed to sell its Polo Jeans business back to Polo Ralph Lauren Corp. (RL) for $355 million.

Yankee Candle Posts Drop in Profit

Yankee Candle Co. Inc. (YCC) posted lower fourth-quarter profit Wednesday, hurt by costs from closing underperforming stores and restructuring.

The company, which sells its scented candles at a variety of stores and its own shops, said net income fell to $43.4 million, or $1.01 per share, from $48.0 million, or $1 a share, a year earlier. There were fewer shares outstanding in the latest period, which boosted earnings per share.

Excluding items, the company reported earnings of $1.09 a share. Analysts, on average, expected profits of $1.06 a share, according to Reuters Estimates.

Yankee Candle forecast first-quarter earnings of 24 cents to 25 cents a share, and full-year profit of $2.01 to $2.07 a share. The company expects sales growth of 6 percent to 8 percent for the first quarter and full year.

Analysts, on average, expected earnings of $1.99 a share for the full year, according to Reuters Estimate.

Mittal Steel's Q4 Profit Down

LONDON — Mittal Steel Co., the world's largest steelmaker that also is making a hostile bid for nearest competitor Arcelor SA, unveiled substantial declines in fourth quarter and full-year earnings Wednesday.

The company, which is facing opposition from officials in France and Belgium to its 18.6 billion euro ($22.1 billion) bid for Arcelor, said the results were not directly comparable with the previous year because of Mittal's acquisitions and reorganizations during 2005.

Net profit in the three months to Dec. 31, 2005, halved to $650 million from $1.55 billion a year ago, while full-year earnings fell 28 percent to $3.37 billion. Revenue in the quarter rose 14 percent to $7.1 billion, while full-year revenue rose 27 percent to $28.1 billion.

Chief Executive Lakshmi Mittal said the result was a "solid performance in a more challenging year."

The company forecast that operating income would increase in the first quarter. Shipments are expected to grow 10 percent with the inclusion of Mittal Steel Kryviy Rih, the Ukrainian steel mill it purchased in an October auction.

Mittal Steel was formed in December 2004 from the merger of Dutch-listed Ispat International and private Mittal family vehicle LNM Holdings. Since then the company has made large-scale acquisitions, including International Steel Group in the United States and Kryvorizhstal.

Luxembourg-based Arcelor has rejected the bid from Mittal. The governments of Luxembourg and Spain have opposed the bid, while several top French officials have criticized it out of concern that jobs would be cut in France and elsewhere on the continent. Mittal has said there wouldn't be job cuts.

Lakshmi Mittal said Wednesday the steel industry needs companies with a global reach that a merger could deliver.

"The strength of our performance in current market conditions illustrates the increased stability that industry consolidation has delivered," he said in a statement. "This same logic lies at the heart of our proposed strategic merger with Arcelor."

Arcelor, created in 2002 from a merger of French, Luxembourg, Belgian and Spanish steel interests, employs just over 94,000 workers: almost 30,000 in France, 12,500 in Belgium and 6,000 in Luxembourg, where it is the country's largest employer.

Mittal shares fell 0.7 percent to 28.71 euros $34.19 on the Euronext exchange in Amsterdam.

Credit Suisse Results Disappoint

ZURICH — Credit Suisse shares slumped 7 percent on Wednesday after the bank released results showing that surging costs and persistent troubles in investment banking had eroded a rise in earnings.

Europe's seventh largest bank by market value reported a 15 percent rise in fourth-quarter net profit to 1.103 billion Swiss francs ($844.6 million), but a 26 percent jump in costs overshadowed gains from rising fees and private equity sales. The performance was also flattered by a lower tax burden.

The result came two days after Credit Suisse unveiled a surprise cut in quarterly profit of 421 million francs due to charges for share-based compensation for employees.

Credit Suisse shares had tumbled 7 percent to 72.55 Swiss francs by 1150 GMT, the biggest loser in the Dow Jones index of European blue chip stocks.

"The reason for the disappointment is clearly the higher- than-expected expenses," said analyst Javier Lodeiro at bank Sarasin.

Credit Suisse is nearing the end of a lengthy and painful restructuring, welding its investment banking and wealth management operations together under a single brand, but still struggling to outperform its mighty rival UBS AG.

Credit Suisse has battled with costs since the high-rolling technology boom, when it was renowned for luring star bankers with lavish pay and bonus packages.

Those days have long gone, but the firm has still not managed to become as disciplined or profitable as many peers.

Credit Suisse's institutional securities business, for example, in the fourth quarter had a cost/income ratio — a measure of efficiency — of 92.4 percent, compared with 70.2 percent for UBS's investment bank.

Particularly poor was equity trading, with derivatives and convertibles dragging revenues down by 22 percent from the quarter before, despite devoting an increasing amount of risk capital to the business.

"We think this is Credit Suisse's worst returns on risk capital in equity trading for over 6 years," said Huw van Steenis, an analyst at Morgan Stanley.

Still, the bank showed no signs of weakening its commitment to investment banking, which has consistently underperformed peers in recent years. The unit's head Brady Dougan said he aimed to expand into commodities and fixed income proprietary trading.

Dividend Hike

Tough-talking chief executive Oswald Gruebel, credited with navigating the sprawling group through a tough restructuring, acknowledged the need to improve the bank's performance.

"From a management point of view we are pretty confident that we can go on improving these results," he said. "We still need to work on that, we know it."

Gruebel repeated the bank's ambitious goal of earning more than 8 billion francs in net profit for 2007.

The bank benefited from the realization of gains in private equity stakes, posting a 66 percent jump in "other revenues" in the fourth quarter to 1.061 billion francs. Taxes also fell by 72 percent to a mere 86 million francs.

Chief Financial Officer Renato Fassbind said investors should expect the private equity gains to continue.

"We are one of the most important players in the market and have proven we are quite successful at that," he said. "We will have sustainable gains in that area."

Markets had expected a fourth-quarter result of 1.174 billion francs, once the 421 million francs from the accounting change is deducted from forecasts, according to the average forecast in a Reuters poll of 18 analysts.

Net new assets in Credit Suisse's private banking business were 8.6 billion francs in the fourth quarter compared with 14.3 billion in the third quarter and 3.9 billion in the last quarter of 2004. Analysts had, on average, expected 7.4 billion francs of inflows.

Total assets under management rose to 659 billion francs at the end of 2005 from 539 billion at the end of 2004.

Credit Suisse reaffirmed that its Winterthur insurance operation would be ready for flotation in the second half of the year but said the timing of any IPO would be determined by conditions in the equity markets.