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Seagram toasts 4Q profits
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August 12, 1998: 4:14 p.m. ET
Beverage/entertainment concern says cash flow lifted by entertainment side
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NEW YORK (CNNfn) - Seagram Co. Ltd. Wednesday reported better-than-expected profits for its fiscal fourth quarter despite weakness in its international beverage business.
The beverage and entertainment concern reported net income totaled $3 million, or 1 cent a share, compared with $48 million, or 13 cents a share, in the year-ago quarter.
Analysts had expected a loss of 1 cent, according to First Call.
The results exclude a one-time gain of $493 million from the May 27 sale of its remaining holdings in Time Warner Inc. But they also include the operations of Tropicana Products Inc., which will be sold for $3.3 billion cash to PepsiCo Inc.
The juice business already has been declared discontinued operations and generated income of $15 million, or 4 cents a share, in the latest quarter.
Still, shares of the Canadian company (VO) shot up 3-5/16 in Wednesday trading on the New York Stock Exchange after investors viewed the profits as surpassing Wall Street's expectations.
"People were holding their breath waiting for something negative to happen," said Scott Davis, analyst at Schroder & Co.
"There was nothing negative in the story," Davis added.
For the fiscal fourth quarter, ended June 30, Seagram said cash flow (earnings before interest, taxes, depreciation and amortization) dropped 11 percent to $248 million from $278 million, primarily due to its weaker spirits business.
In a brief statement, Edgar Bronfman Jr., Seagram's president and chief executive, attributed the problems with its wine and spirits business to slower sales in Asia.
"Asia Pacific market conditions, in line with our earlier projections, continued to be difficult," Bronfman said.
Cash flow at Universal Studios Inc., its entertainment unit, rose 19 percent to $125 million. In addition, Seagram's acquisition of PolyGram "will result in significant long-term growth and value creation," Bronfman said.
Overall, net income in the latest quarter rose to $324 million, or 92 cents a share, from $148 million, or 40 cents a share, a year earlier.
Revenue eased to $2.2 billion from $2.5 billion a year ago.
For the full year, net income totaled $946 million, or $2.68 a diluted share, on revenue of $9.7 billion. The fiscal 1998 results include the operations of Tropicana and all one-time gains. 
-- by staff writer Robert Liu
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