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Loews Corp., the holding company run by New York's Tisch family, and its CNA Financial Corp. insurance unit reported first-quarter earnings that fell short of analysts' estimates as policy sales shrank.
Net income at Loews declined for the third straight quarter, falling 14 percent to $662 million, or $1.05 a share, from $768 million, or $1.20, the New York-based company said today in a statement. Revenue fell at CNA, sending the stock of both companies tumbling the most in three months. . ..
Profit at Lorillard, Loews's tobacco unit, fell 20 percent to $67 million on a decline in revenue. Loews is preparing to spin off the cigarette business, which includes the Newport brand, and said it had $13 million in administrative expenses in the period tied to the transaction.
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Carolina Group, a tracking stock for Loews Corp's Lorillard Inc cigarette business, posted a lower quarterly profit on Monday, hurt by lower investment income and costs related to the proposed spin-off of Lorillard.
First-quarter net income fell to $171 million, or 98 cents per share, from $189 million, or $1.08 per share, a year ago.
Net sales rose to $921 million from $913 million a year ago, due mostly to price increases.
Selling, advertising and administrative expenses rose to $100 million from $82 million a year ago, due to costs related to the proposed spin-off of Lorillard from Loews and higher legal expenses.
Loews Corp. (LTR), a commercial property and casualty insurance provider, reported a decline in its first-quarter profit, reflecting lower results from CNA Financial and Lorillard, and net investment losses compared to prior year's gains. The company also said that Carolina Group's (CG) first-quarter net income declined on higher expenses related to the proposed spin-off of Lorillard, and lower investment income.
The company's first-quarter consolidated net income, including both the Loews Group and Carolina Group, was $662 million, lower than $768 million in the previous year.
Loews Corp. Monday reported first-quarter income from continuing operations of $474 million, or 90 cents a share, compared with $645 million, or $1.19 a share, in the year-earlier quarter.
Revenue for the three-month period ended March 31 slipped to $4.54 billion from $4.61 billion a year ago.
Carolina Group, a subsidiary and tracking stock of Loews Corp., posted first-quarter net income of $171 million, or 98 cents a share, compared with net income of $189 million, or $1.08 a share, in the first quarter of 2007.
Loews Corp (LTR.N) said on Monday fourth-quarter profit fell 31 percent, hurt by subprime investment losses and weaker-than-expected results in its insurance, tobacco and drilling businesses.
Net income at New York-based Loews, a conglomerate run by the billionaire Tisch family, fell to $512 million from $746 million a year earlier. . . .
Lorillard earnings fell 6 percent to $206 million, hurt by litigation costs. Profit attributable to Carolina shareholders was $128 million, or $1.18 per share.
Excluding items, profit was $1.30 per share, 7 cents below the average analyst forecast, Reuters Estimates said. Net sales at Lorillard rose 2 percent to $957 million as higher prices offset a 4.3 percent drop in domestic shipments.
SHARES OF LOEWS HAVE RISEN SMARTLY in recent years, but the New York conglomerate continues to trade at a discount to its net asset value. Its recent decision to spin off its Lorillard tobacco unit could help narrow the gap -- and boost the stock price. The transaction may let it shrink its total of outstanding shares by 20% and eliminate much of the remaining tobacco-liability risk that may be hurting its stock. . . .
Lorillard may benefit from the elimination of the tracking stock; many institutional investors don't like trackers because they offer no direct ownership in a company. An independent Lorillard also is apt to increase its dividend, now $1.82 a share. Lorillard also might become a takeover candidate in a consolidating global tobacco industry, owing to the strength of its principal brand, Newport.
Tisch has said that management's "singular goal is to create value for the holders of Loews common stock." The company has a history of delivering, and the Lorillard spin off is the latest move to that end.
Loews Corp., the holding company run by New York's Tisch family, rose 2.1 percent in New York trading after Barron's said the firm may gain 20 percent when it spins off cigarette maker Lorillard Inc.
Separating from Lorillard will eliminate New York-based Loews's tobacco-liability risk, Barron's said in its edition dated today.
Loews said Dec. 17 it will divest Lorillard, the oldest U.S. cigarette maker, as it capitalizes on rising prices for tobacco stocks. Loews, which gets more than half its revenue from Chicago-based property and casualty insurer CNA Financial Corp., also owns oil and natural gas driller Diamond Offshore Drilling Inc.
Loews' plan to exit the cigarette business by spinning off its Lorillard Tobacco unit pleased but did not entirely surprise investors since Loews, a diversified conglomerate which was built by the brothers Laurence and Preston Robert Tisch, and is now run by Laurence’s son James, has been divesting itself of its stake in Lorillard over the years. The Tisch family continues to control Loews.
Analysts said Monday that it was an opportune time to make the move.
Loews Corporation (NYSE:LTR; CG) today announced that its Board of Directors has approved a plan to spin off its entire ownership interest in Lorillard, Inc. to holders of its Carolina Group stock and Loews common stock in a tax free transaction. As a result of the transaction, Lorillard, presently a wholly owned subsidiary of Loews, would become a separate publicly traded company.
Loews said goodbye to hundreds of millions of dollars of annual dividends after cutting loose its tobacco subsidiary Lorillard on Monday. But Lorillard is not alone as the other top tobacco companies look for ways to expand outside of the world of cigarettes, and investors seemed pleased with its decision.
Loews, a conglomerate that operates offshore drilling rigs, along with Bulova watches, hotels and an insurance company, announced it was spinning off Lorillard. . . .
Now that Lorillard will be independent it will be able to make acquisitions of its own, although it may leave it open as a takeover target.
Getting rid of Lorrilard entirely is a double-edged sword for Loews. While it might attract more shareholders to the remaining operations, the tobacco unit was profitable. It provided Loews with 21.5% of its sales and 33.2% of its income last year, according to Revere Research.
"Even though the spin-off would eliminate the overhang of tobacco litigation, dividends from Lorillard still represent the majority of cash flow to Loews and a highly stable source of earnings and cash flow," Moody's vice president Janice Hofferber wrote in a report after the deal was announced. But Moody's said that the spinoff would not impact the $900 million in rated debt Loews currently owes. The agency affirmed Loews' A3 rating, highlighting its view that the conglomerate will benefit from the elimination of its exposure to tobacco litigation.
After the spin-off, Lorillard's headquarters will remain in Greensboro, N.C., and Martin Orlowsky will remain as chairman.
Loews Corp., a conglomerate with interests in financial services, hotels and watches, said Monday it plans to spin off cigarette maker Lorillard Inc. as a separate publicly traded company.
The move should enable Loews to pursue growth in other areas such as energy while the cigarette maker will be able to pursue acquisitions of its own to expand in the U.S. tobacco market.
Loews shares rose 2.6 percent in midday trading.
As to why the company has now chosen to separate itself from Lorillard, David Adelman, who follows the company for Morgan Stanley, said, "Loews is less dependent on Lorillard than it had been and it has already gotten significant value out of the business."
And Mr. Bornstein of Omega added, "It is not a pleasant business to be in."
"They may be thinking that they would be better off in other business," he said. "They are not going to do it at a terrible price, but if you have a choice of being in the cigarette business or another business, from a socially responsible perspective, within a range of values, you might pick something else."
It is not a pleasant business to be in. . . . if you have a choice of being in the cigarette business or another business, from a socially responsible perspective, within a range of values, you might pick something else. Ben Bornstein, an analyst at Omega Advisors, which owns about 1.9 million shares of Loews, on the plan to divest in Lorillard.
Loews Corp. (LTR) plans to spin off tobacco company Lorillard Inc., giving the seller of Newport and Kent cigarettes more flexibility to use its cash for acquisitions and share buybacks as a separately traded company.
The move would eliminate Loews Corp.'s Carolina Group (CG) tracking stock and could allow Lorillard - which currently pays all its net earnings to parent company Loews - to become a stronger competitor in the U.S. tobacco industry, where cigarette volumes are declining.
"The U.S. tobacco market has undergone substantial changes...competitors are making moves to improve their positions," Loews Chief Executive James S. Tisch pointed out during a conference call.
Loews Corp. will spin off Lorillard Inc., the oldest U.S. cigarette maker, into a separate public company as New York's billionaire Tisch family capitalizes on rising prices for tobacco stocks.
Holders of Loews and its Carolina Group tracking stock for the tobacco unit will get shares in Lorillard, whose brands include Newport and Kent, New York-based Loews said today. Carolina's share price implies a value of about $15 billion.
Tobacco stocks are among this year's best performers as investors seek companies whose earnings are likely to weather slower economic growth. Lorillard will spend less on dividends, giving it flexibility to buy back shares and make purchases as the industry consolidates, said Martin Orlowsky, who will continue to run the cigarette maker.
``It's a good move for Lorillard at a time of much activity in the tobacco industry,'
Lorillard Inc., the oldest U.S. cigarette company, will be spun off by Loews Corp. as New York's billionaire Tisch family capitalizes on rising prices for tobacco stocks.
Holders of Loews and its Carolina Group tracking stock for the tobacco unit will get shares in Lorillard, whose brands include Newport and Kent, the New York-based company said today. . . .
``Tobacco is not a strategic asset for us,'' said Loews Chief Executive Officer James Tisch in an interview. ``The company can do better as an independent.''
The spinoff of Lorillard should improve Loews's ``risk profile in the eyes of rating agencies and equity investors,'' he said in a conference call with investors and analysts.