Corporate Earnings: Winners and Losers in Q2

Strategic Insights -

In the second quarter of 1998, several prominent companies reported significant increases in profits, while others struggled to keep up with the market's demands. Travelers Group, for instance, saw its net income rise by 29%, driven by gains in insurance and consumer finance. On the other hand, McDonald's Corp. experienced a 37% decline in profit, largely due to the cost of implementing a new food preparation system. Meanwhile, Continental Airlines reported a 27% boost in earnings, thanks to all-time high load factors, and Warner-Lambert Co. saw its profits jump by 46% on the back of strong sales of its anti-cholesterol and diabetes drugs.

Key Takeaways:

  • Travelers Group reported a 29% increase in net income, driven by gains in insurance and consumer finance, with earnings per share rising to 99 cents from 77 cents in Q2 1997.
  • McDonald's Corp. saw its profit drop by 37% due to the cost of implementing a new food preparation system, with earnings per share plummeting to 33 cents from 61 cents in Q2 1997.
  • Continental Airlines reported a 27% boost in earnings thanks to all-time high load factors, with net income rising to $163 million from $128 million in Q2 1997.
  • Warner-Lambert Co. saw its profits jump by 46% driven by strong sales of its anti-cholesterol and diabetes drugs, with earnings per share increasing to 40 cents from 28 cents in Q2 1997.
  • Temple-Inland Inc. reported a rebound in its paper-making unit, with net income rising to $34.6 million from a loss of $15.6 million in Q2 1997.
  • Schlumberger Ltd. reported a 17% increase in net income, driven by strong oilfield drilling revenue, even as oil prices fell, with earnings per share rising to 69 cents from 60 cents in Q2 1997.

Statistics:

  • Travelers Group's net income rose to $1.14 billion in Q2 1998 from $0.883 billion in Q2 1997 (29% increase).
  • McDonald's Corp.'s profit dropped to $233.8 million in Q2 1998 from $438.2 million in Q2 1997 (-37%).
  • Continental Airlines' net income rose to $163 million in Q2 1998 from $128 million in Q2 1997 (27% increase).
  • Warner-Lambert Co.'s profits jumped to $338.1 million in Q2 1998 from $231.4 million in Q2 1997 (46% increase).
  • Temple-Inland Inc.'s net income rebounded to $34.6 million in Q2 1998 from a loss of $15.6 million in Q2 1997.
  • Schlumberger Ltd.'s net income rose to $359.4 million in Q2 1998 from $306.5 million in Q2 1997 (17% increase).

Sources:

  • "Travelers Group Reports Profit Rise on Gains in Insurance and Consumer Finance"
  • "McDonald's Corp. Profit Drops on Cost of New Food Preparation System"
  • "Continental Airlines Reports All-Time High Load Factors Boost Earnings"
  • "Warner-Lambert Co. Sees Profits Jump on Sales of Anti-Cholesterol and Diabetes Drugs"
  • "Temple-Inland Inc. Reports Rebound in Paper-Making Unit"
  • "Schlumberger Ltd. Reports Strong Oilfield Drilling Revenue Boosts Earnings"