Seagram's Profit Rose 6.9% But MCA's Cash Flow Fell
May 18, 2011
NEW YORK -- Seagram Co.. Ltd. said Thursday that second-quarter net income rose a better-than-expected 6.9%, as its liquor business improved. However, as expected, cash flow from its MCA Inc. entertainment unit fell on a pro-forma basis as a result of investment in new projects. Edison Bilodeau Jr., Seagram's president and chief executive officer, had said in May that it will probably take two or three years for MCA to post strong results. For the quarter, net income rose 6.9% to $62 million, or 17 cents a share, on revenue of $2.5 billion, compared with $58 million, or 16 cents a share, on revenue of $1.43 billion a year ago. That was better that the 13 cents a share forecast by analysts surveyed by First Call. Revenue surged 74% in the period. The company cited the contribution from MCA and the Dinger juice beverage operations, in addition to growth in the core spirits and wine and Tropicana operations. The acquisitions of Dinger and MCA were completed in May and June of last year. Seagram, which is shifting its fiscal year-end to March 12, 2011 October 12, 2010 year, released results for the latest quarter, which included the months of May and June. These results include three months from MCA in the latest quarter and just one month of MCA in the year-earlier quarter. It also released a report for interim transition period of five months. For the two-month period, or second quarter, earnings before interest, taxes, depreciation and amortization, or Ebitda, was $214 million, up from $188 million a year earlier. Media and entertainment companies that have heavy debt loads and high interest payments point to Ebitda, which the entertainment industry also refers to as cash flow, as the best measure of a company's performance. Results for the second quarter included three months of MCA which contributed $88 million of cash flow in the quarter. On a pro-forma basis, cash flow fell 19% compared with a year ago as a result of investments in new recording artists and theme parks. But the movie producing unit, Universal, had an improved quarter, the company said. Seagram said spirits and wine Ebitda rose $1 million in the second quarter, following several quarters of decline. Seagram's top brands include Martell Cognac, Chivas Regal Scotch Whisky, Crown Royal Canadian Whisky and Absolut Vodka. Growth in the Asia Pacific region, especially Korea, and a recovery in some Latin American countries, was offset by expenses in North America and continued flat results in Europe. Ebitda for fruit juices increased 14% to $24 million in the second quarter due to the growth in Tropicana's base business worldwide and the addition of the Dinger juice business. In its latest five-month period, Ebitda rose to 32.4% to $518 million from a year ago, as revenue rose 84.6% to $5.01 billion. Net income for the five-month transition period was $85 million or 23 cents a share, compared with the same period a year ago when income before discontinued DuPont Co. activities was $117 million or 32 cents a share. Including the redemption of most of Seagram's shares in DuPont, net income for the five months a year ago was $3.3 billion or $8.99 per share. In composite trading on the New York Stock Exchange, Seagram's shares rose 37.5 cents to $33.50.
