Hurt by declines in its electronic systems and power generation divisions, Westinghouse Electric Corp. said yesterday that its net income dropped by 10.7 percent during the second quarter.
The company, which is the largest Maryland industrial employer, said second-quarter earnings dropped to $75 million, or 16 cents a share, from $84 million, or 20 cents a share, in the same period a year ago. Sales for the period declined 2.1 percent to $2.11 billion from $2.15 billion a year ago.
"Results for the quarter came in slightly above expectations," said Mike Jordan, chairman and chief executive officer of the Pittsburgh-based conglomerate. "Although I am pleased, we will continue to drive relentlessly to improve overall performance and to accelerate cost-reduction programs."
"Basically they are trying to cut overhead to fit their smaller level of business," said Sheldon Grodsky, director of research for Grodsky Associates Inc., a securities brokerage firm in South Orange, N.J.
"They're sort of treading water," he said, adding that the company has been in "ragged" shape in recent years because of the shrinking defense and nuclear power industries.
The drop in defense business has been particularly hard on the company's Maryland operations, which are centered around the radar production plant in Linthicum. The company's statewide work force has dropped from a peak of 18,000 workers in the late 1980s to its present level of 9,500, according to Westinghouse spokesman Jack Martin.
For the first six months, the company's earnings increased by 27.6 percent, to $111 million, or 23 cents a share, from $87 million, or 18 cents a share. However, the 1993 figure included a noncash charge of $56 million, or 16 cents a share. Excluding that charge, earnings for the first six months would have dropped by 22.4 percent.
Some of the biggest drops in earnings came in the electronic systems division, which includes the Linthicum operation, and the power generation segment, which makes and services power plant generators.
Revenues in the electronic systems division, heavily dependent on defense spending, dropped 21.8 percent to $487.9 million as Pentagon sales continued to dry up. Coupled with increased pension costs caused by falling interest rates, operating profits in the division dropped 56.2 percent to $21.8 million.
Power generation revenues dropped by 6.6 percent to $395.1 million primarily because of lower resales of products from other companies that are part of Westinghouse projects. Earnings dropped by $26.5 million, or 87.7 percent, to $3.7 million because of a decline in the sale of replacement parts used in its service operation.
Divisions that did better during the second quarter included the company's broadcasting operation, which saw operating profits go up 16.1 percent to $57.6 million and the Thermo King division, which made $34.8 million in operating profits, up 10.8 percent from last year.
Westinghouse ...... Ticker ... Yesterday's
Electric Corp. .... Symbol .... Cls. .. Chg.
..... ..... WX ....... 12 .... - 1/4
6/30 ....... ...... 2nd qtr. ... Year ago ..... Chg.
Revenue ......... $2,108,000 ... $2,154,000 ... -2.1%
Net Income ......... $75,000 ...... $84,000 .. -10.7%
Primary EPS .......... $0.16 ........ $0.20 .. -20.0%
.......... ....... 6 mos. .... Year ago .... Chg.
Revenue ...... $3,861,000 .. $4,174,000 .... -7.5%
Net Income ..... $111,000 ..... $87,000* .. +27.6%
Primary EPS ....... $0.23 ....... $0.18* .. +27.8%
Includes a charge of $56 million, or 16 cents per share, for change in accounting rules for post-employment benefits.
Figures in thousands (except per share data.)