Sales up 7.4 % at 324 of S&P 500 reporting so far -
Some of this is because of the lower dollar, especially for the health care companies...
U.S. Companies Generate Biggest Revenue Gains in Almost 2 Years
By Adam Steinhauer
New York, Feb. 3 (Bloomberg) -- U.S. companies generated their biggest revenue gains in almost two years in the fourth quarter, led by companies such as Exxon Mobil Corp., Amgen Inc. and Southern Co.
Revenue rose 7.4 percent in the period for the 324 companies in the Standard & Poor's 500 Index that had reported results as of Thursday, according to Bloomberg data. Oil companies and energy producers benefited from rising demand for oil and gas because of concern that a war in Iraq will disrupt supplies, while health- care companies are selling more drugs and medical devices as the U.S. population ages.
The revenue growth may not be enough to raise stock prices, investors said. Many companies relied on reduced expenses to boost profits last quarter, as the U.S. economy expanded at its slowest pace since the 2001 recession. Ford Motor Co. and other companies with little or no sales growth have cut thousands of jobs to lower costs.
``We still need more top-line growth,' said Erick Maronak, who helps manage $2 billion at Newbridge Partners LLC in New York. ``You really can't downsize your way to prosperity.''
The fourth quarter's sales growth was the most since the first quarter of 2001, when revenue rose 9.5 percent for the average company in the S&P 500. Earnings per share in the fourth quarter rose an average of 14 percent, almost twice as much as revenue.
Hurting Stocks
Companies such as AT&T Corp. and Motorola Inc. have said sales this year may fall or rise less than 5 percent, disappointing many investors and contributing to last month's stock market declines. The S&P 500, which rose the first nine trading days of January, ended the month down 2.7 percent.
Corporations are cutting jobs and closing plants after over- spending on computers, telecommunications systems and other equipment in the late 1990s, analysts said.
``It's not just we have too many fiber-optic lines leading to nowhere,'' said Chuck Hill, head of research at Thomson First Call. ``We have too many auto-assembly plants, too many burger joints, too many aluminum smelters.''
Ford, the world's second-largest automaker, was typical of companies with slow sales growth. It improved fourth-quarter results with a plan to eliminate 35,000 jobs and close five plants by 2005. While sales rose 2.1 percent to $41.6 billion, the company narrowed its net loss to $130 million from $5 billion a year earlier.
Energy companies had some of the biggest sales gains, with revenue up an average of 34 percent in the fourth quarter, helped by oil prices that rose 15 percent in the last two months of the year. Prices have risen because of concern about a war in Iraq and a strike by oil workers in Venezuela, investors said.
Oil Companies, Utilities
At Exxon Mobil, the world's biggest publicly traded oil company, sales rose 18 percent to $56.2 billion. That helped lift earnings 53 percent to $4.09 billion from $2.68 billion a year earlier.
Utility companies had sales growth of 15 percent as they raised prices to pay for more expensive oil and gas.
Southern Co., the owner of Atlanta's electric utility, said fourth-quarter sales rose 14 percent to $2.46 billion. Net income surged 44 percent to $167 million from $116 million a year earlier as the company cut costs and added customers.
For energy companies, the higher oil prices are ``a positive, in view of the fact the world economy is not perking along the way we'd hoped,'' said Alan Ackerman, executive vice president of investments at Fahnestock & Co. in New York.
Sales at health-care companies rose 12 percent in the fourth quarter. Amgen, the world's largest biotechnology company, boosted revenue 57 percent to $1.77 billion as it sold more drugs to treat anemia and infections related to chemotherapy. Net income more than doubled to $456.4 million from $163 million.
`Pretty Darn Weak'
Health care is ``less economically sensitive,'' said Crit Thomas, who manages about $2 billion in growth stocks for National City Corp.'s Armada funds in Cleveland. ``The economy was pretty darn weak in the fourth quarter. That makes health care look that much better.''
For other industries, sales were limited by the slow-growing economy and as companies put off buying new equipment.
Sales at telecommunications companies declined 1.9 percent, as AT&T and rivals cut prices to stem defections of business customers.
Financial service companies' revenue rose 0.8 percent on average. At Janus Capital Group Inc., revenue fell 26 percent as investors withdrew their money from the company's mutual funds.
Investors said sales will rise at a faster pace when businesses begin spending more on new equipment. That may not happen until after the U.S. conflict with Iraq is resolved. Until then, corporate purchasing managers are delaying spending.
``This Iraq situation is causing purchasing managers to sit on their hands,'' Armada Funds' Thomas said. ``It's a big rock in the way of the economy.'' |
