Earnings: Tyco, Kodak, Estee Lauder, CVS, Shell

Earnings: Tyco | Estee Lauder | Kodak | CVS | Shell

Tyco Earnings Nearly Quintuple

NEW YORK (Reuters) - Conglomerate Tyco International Ltd. (TYC) Thursday reported better-than-expected second-quarter profit on strength in its engineered products division but said third-quarter earnings would be below expectations.

The company also announced a $2 billion stock buyback.

Net earnings jumped to $1.02 billion, or 49 cents per share, from $192 million, or 10 cents per share, a year earlier.

Earnings from continuing operations were 52 cents, including a favorable impact of 7 cents a share from tax matters and divestitures. Analysts, on average, expected profit from continuing operations of 42 cents per share, according to Reuters Estimates.

It earned 19 cents per share a year ago, including charges related to the retirement of debt.

Sales rose 2 percent to $10.21 billion, matching Wall Street estimates.

Tyco's engineered products business, which makes products like industrial valves and fire sprinklers, reported operating profit jumped 16 percent, while sales increased 5 percent. Its fire and safety, health care, and electronics divisions reported lower operating profits, though electronics and health care had higher revenues.

Tyco forecast third-quarter earnings from continuing operations of 46 cents to 48 cents a share, excluding special items. It sees improvement in its health care and fire and security businesses.

Analysts polled by Reuters Estimates expect third-quarter profits of 50 cents a share.

The company forecast full-year earnings from continuing operations in a range of $1.80 to $1.85 a share. Analysts estimated 2006 earnings of $1.83.

Tyco, in the process of splitting into three publicly traded companies, said it has completed a share buyback program announced in August, 2005, and its board has approved a new $2 billion program.

It also said it reduced debt by $2.5 billion during the quarter, reaching its goal of $10 billion in total debt.

Tyco stock has lagged the market, falling 6 percent so far this year and down 15 percent from its 52-week high in May 2005.

But shares have almost quadrupled in value from their low of about $7 a share in July 2002, when Chief Executive Ed Breen took over.

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Estee Lauder Sees Profit Drop

CHICAGO (Reuters) - Estee Lauder Cos. Inc. (EL) posted a 44 percent drop in quarterly profit Thursday as the cosmetics maker beefed up marketing spending, took a charge for cost cutting and grappled with the closing of some Federated stores.

Profit in its fiscal third quarter, ended March 31, dropped to $59.5 million, or 28 cents per share, from $106.2 million, or 46 cents per share, a year earlier.

Earnings from continuing operations fell to 29 cents per share from 47 cents per share a year earlier.

Excluding a charge of 15 cents per share related to its cost-cutting plan, the company earned 44 cents per share from continuing operations. That compared to analysts' average forecast of 39 cents per share, Reuters Estimates said.

Estee Lauder's largest customer, Federated Department Stores Inc. (FD) — the operator of Macy's and Bloomingdale's — has been closing stores following its acquisition of May Department Stores, cutting the number of outlets for Estee Lauder cosmetics and fragrances.

Sales rose 3.5 percent to $1.58 billion, and were up 6 percent excluding the impact of foreign currency translation, the company said.

For the full year, Estee Lauder said sales should rise about 3 percent in constant currency, and forecast earnings from continuing operations of $1.61 to $1.72 per share, including 22 cents to 26 cents per share in charges related to its cost-cutting plan. The company said the outlook is consistent with a forecast of $1.87 to $1.94 per share it gave in October, which did not include the charges.

Analysts, on average, expected the company to earn $1.85 per share this year.

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Eastman Kodak Posts Wider Loss

NEW YORK (Reuters) - Photography company Eastman Kodak Co.(EK) Thursday posted a wider quarterly loss, despite higher revenue, as sales of more profitable traditional camera and products continued to slow.

Kodak reported a first-quarter net loss of $298 million, or $1.04 a share, compared with $146 million, or 51 cents a share, in the same period last year.

Revenue at Kodak, the world's top maker of photographic film, rose to $2.89 billion from $2.83 billion, but fell far short of analysts estimates of $3.11 billion, according to Reuters Estimates.

Kodak is in the midst of an effort to transform itself into a provider of digital products and printing services. Since late 2003, Kodak has been beefing up its digital products, hoping to outpace the decline in demand for film, historically its main revenue source. At the same time, it is shrinking its costs by cutting up to 25,000 jobs and trimming manufacturing assets.

Kodak shares have risen about 17 percent so far this year, outperforming the S&P 500 index, which has climbed 4.75 percent.

Cvs Profit Increases Nearly 14%

CHICAGO (Reuters) - CVS Corp. (CVS), the No. 2 U.S. drugstore chain, Thursday said first-quarter profit rose nearly 14 percent as new stores helped to offset the impact of Easter falling later in the year, which pushed sales of candy and other items into April from March.

Profit rose to $329.6 million, or 39 cents per share, from $289.7 million, or 34 cents per share, a year earlier.

Analysts, on average, had expected 38 cents per share, according to Reuters Estimates.

"The stores we acquired in 2004, in both Florida and Texas, are experiencing dramatic growth in sales as we continue to benefit from the successful turnaround of those assets," Chairman, President and Chief Executive Tom Ryan said in a statement.

Sales for the quarter, ended April 1, rose 8.7 percent to $9.98 billion. Sales at stores open more than a year, a key metric known as same-store sales, rose 6.2 percent. Same-store pharmacy sales rose 6.8 percent, while same-store sales of front-end, or general merchandise, climbed 4.7 percent.

CVS estimated that the timing of Easter had a negative impact of about two percentage points on front-end same-store sales, and 0.6 percentage point on total same-store sales.

Woonsocket, Rhode Island-based CVS ranks behind rival Walgreen Co. (WAG) in terms of revenue but has more stores. CVS operated 5,483 stores as of April 1, while Walgreen had 5,222 as of April 30. CVS is set to add about 700 Sav-on and Osco drugstores once the acquisition of Albertsons Inc. operations is completed in a few weeks.

In February, CVS forecast earnings of 36 cents to 38 cents a share for the first quarter and $1.54 to $1.58 a share for the full year, including costs of 5 cents per share related to the expensing of stock options.

Oil Prices Boost Shell Profit

AMSTERDAM, Netherlands - (AP) - Royal Dutch Shell PLC said Thursday its first-quarter profit rose 3.1 percent, boosted by the high price of oil, but the company said it may not meet earlier targets in restoring its proven oil reserves after its 2004 accounting scandal.

Net profit at the world's third-largest oil company came to $6.89 billion, up from $6.68 billion in the same quarter a year earlier. Sales rose 5.3 percent to $76.0 billion from $72.2 billion.

Chief Executive Jeroen van der Veer called the results "satisfactory despite a series of operational challenges in the quarter." These included slowdowns in production "in Nigeria due to civil disturbances and production deferred in the Gulf of Mexico as a result of the 2005 hurricanes."

In a separate statement, he said the company might not be able reach its previous goal of achieving a 100 percent replacement rate for the period 2004-2008 by the end of 2008. Replacement rates, which show the amount of oil a company adds to its proved reserves compared with the amount it pumps, is a key industry gauge.

"We still have a fair prospect of achieving that target," Van der Veer said. "However, we do not want this target to drive the wrong business decisions, either in the timing of projects, or in the type of resources that we prioritize."

Shell is recovering from a major accounting scandal in which it was forced repeatedly to reduce the size of its estimated oil reserves in 2004 and 2005, ultimately forcing the departure of then-Chief Executive Philip Watts. It also led the company to merge its British and Dutch arms into a single company to create a single management board.

In 2005, the company's replacement rate was between 60 percent and 70 percent.

Shell is investing $19 billion in 2006, most of it in exploration and production, to help restore balance. The company has forecast it will add 750 million to 850 million barrels to proven reserves this year.

It said Thursday it would boost investment again, to $21 billion, in 2007.

"Our requirement for competitive returns means that we will probably hold back some of our longer-term projects, until the supply and contracting environment cools down. That in turn makes achieving our SEC proved reserves replacement forecast less likely than it was," Van der Veer said.

He said the company would still try to meet its goals by developing "unconventional" oil resources "such as oil sands and gas-to-liquid" — converting gas to oil or other fluid petrochemicals — rather than by drilling traditional oil fields.

However, the company said that these may not qualify as "proved reserves" under accounting rules set by the U.S. Securities and Exchange Commission.

Shell shares rose 1 percent to 27.45 euros ($34.66) on heavy volume in Amsterdam trading.

KBC PeelHunt analyst Antoine Leurent said Shell's results were "not bad," with earnings slightly higher than analysts had forecast.

"Production was only 3 percent down," he said. "I had expected a stronger impact from Nigeria."

The first-quarter results were largely determined by the high price of oil. Brent crude sold for an average of $61.80 per barrel in the first quarter, versus $47.70 a year earlier.

In the company's exploration and production unit, profit was up 27 percent to $3.74 billion, despite a drop in production volume, as Shell's selling prices were 31 percent higher. Shell produced 3.8 million barrels of oil or oil equivalents per day, a 3 percent decline.

Shell lost 110,000 barrels per day of production in Nigeria, where armed militias have attacked pipelines and pumping stations. The militia took hostages in February who were later released, but are demanding a bigger cut of proceeds from oil production in the Niger Delta.

Shell lost 97,000 barrels per day of production in the Gulf of Mexico, where it is still repairing damage to pipelines and platforms caused by hurricanes Katrina and Rita.

Profit at the oil refining division fell 31 percent to $2.10 billion, partly because of lower margins and partly because last year's results included $427 million in one-time gains, including the sale of a refinery in Bakersfield, Calif.

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