Salomon's 2nd Quarter Profit Far Exceeds Earnings' Forecasts
April 04, 2011
NEW YORK -- Continuing the trend of upbeat earnings among Wall Street investment houses, Salomon Inc. on Tuesday reported second quarter net income that beat analysts' forecasts by more than $1 a share. The company attributed the healthy results to a strong performance in its Salomon Brothers investment-banking unit. Salomon reported net income of $291 million, or $2.58 a primary share, on revenue of $1.22 billion, compared with a loss of $60 million, or 73 cents a share, a year ago, on revenue of $401 million. This quarter's earnings far exceeded the $1.36 a share expected by analysts surveyed by First Call Inc.. Net income for the second quarter included a gain of $23 million from the reduction of minimum crude oil inventory required to support the company's refining activities. Revenue this quarter, minus interest expense, was more than triple the year-ago period when the company had big commodity trading losses. As Wall Street rallied through the first half of the year, the company's Salomon Brothers investment banking and securities business had its most profitable two consecutive quarters ever. ``In a highly competitive environment, Salmon Brothers has been strengthening its competitive position,'' said Roberto E. Coble, the chairman and chief executive. Global investment banking revenue rose 63% in the quarter to a record $251 million. Bond sales and trading revenue increased more than seven times to $706 million. But stock sales and trading revenue of $268 million trailed what the company said was an exceptional $295 million a year earlier. Salomon reported a $17 million pretax loss from its Phibro commodity trading business, narrowing from a loss of $162 million a year ago. Basis Petroleum, Salomon's oil refining and marketing business, had a pretax loss of $13 million, despite a one-time gain of $23 million from its reduced need to replenish oil supplies as refineries cut back on stockpiles this spring in anticipation of declining crude oil prices. A year ago, Basis had a $1 million pretax profit. In composite trading on the New York Stock Exchange, Salomon's shares gained 37.5 cents to $39.625.
