Westinghouse Electric Corp. said yesterday that it expects second-quarter earnings per share to be off by as much as 40 percent compared to a year ago, the result of weakened energy systems and power generation operations.
The Pittsburgh-based conglomerate, which reported 1994 second-quarter earnings per share of 16 cents, also acknowledged that increased interest expense and nonrecurring sales of assets in the second quarter of 1994 will have a negative impact on second-quarter 1995 results.
Financial analysts had been expecting Westinghouse to earn 19 cents per share for the June quarter. The official results are expected to be released in mid-July.
"Our expected performance in the second quarter is disappointing," said Michael Jordan, Westinghouse's chairman and chief executive. "However, we see substantial improvements in many of our segments, including broadcasting, electronic systems, Thermo King and Knoll. We expect the strength of these segments to offset any potential shortfall in power generation earnings this year."
Westinghouse's Electronic Systems Group, which is based in Linthicum and employs more than 10,000, last year accounted for the largest single source of the company's sales, with $2.4 billion. By comparison, power generation and energy systems combined for $3 billion in sales.
Westinghouse attributed the power generation and energy systems shortfalls to a declining U.S. service market, an increasingly competitive business environment and delays of financial closings by customers.
"Power generation has been a problem for everybody," said Donald L. Wampach of Duff & Phelps Investment Research in Chicago. "The business is very competitive. But it's definitely an area where they have a good foothold."
The company also believes new international orders for steam and gas turbines that include long-term contracts will boost earnings in both the second half of the year and longer term.
In the case of energy systems, Westinghouse cited an unusually large, nonrecurring order in the second quarter of 1994 as the primary reason for the expected drop in that segment. Roy L. Morrow, a company spokesman, declined to identify the contract or its amount.
Despite slashing nearly 6,000 jobs as part of a corporate restructuring, Westinghouse may be forced to eliminate additional positions, Mr. Jordan said recently. For instance, Westinghouse hopes to trim as much as $1 billion off its $3.4 billion debt level by the end of 1995. It could not be determined whether the Electronic Systems Group would be affected by any cuts.
While Westinghouse predicted the various shortfalls would contribute to a lower operating profit in the second quarter of 1995, the company maintained that it expects to generate a 20 percent gain in earnings per share for the whole of 1995 vs. 1994. The company based its prediction on the assumption that earnings will continue to be heavily weighted to the second half of the year.
The announcement was made after markets closed. Westinghouse stock closed at $15.75 per share yesterday, unchanged from Monday's close.