Cendant Profit Up 30%

Cendant (CD) reported solid fourth-quarter profits, citing strong revenue growth at many of its real estate and travel businesses.

The New York-based services conglomerate said Monday that net income was $357 million, or 33 cents a share, up 30% from $288 million in the fourth quarter of 2003. The figure was in line with the 33-cent analyst consensus estimate published by Thomson First Call.

In after-hours trading, Cendant stock slipped 40 cents, or 1.7%, to $22.57. Earlier, shares finished regular trading up 55 cents, or 2.4%, at $22.97.

Fourth-quarter earnings included a number of special items, both positive and negative, but taken together they had a neutral effect on EPS. Earlier Monday, Cendant warned of one of these items -- a charge of $17 million, or 2 cents a share, related to a court ruling against one of its subsidiaries in a contract dispute.

Revenue was $4.90 billion, up 13% from $4.34 billion a year earlier, and topping the First Call consensus of $4.60 billion. The company reported record revenue in the following units: real estate franchise and brokerage, employee relocation, car rental, fuel card, global distribution system and online travel.

For all of 2004, Cendant reported EPS from continuing operations of $1.71, up 27% from $1.35 in 2003. Full-year revenue increased 10% to $19.8 billion.

"The last 12 months have been a watershed year for Cendant, during which we began the process of positioning the company for accelerated, long-term growth in our core travel and real estate businesses," said Ronald Nelson, Cendant's president and chief financial officer. "We divested noncore assets, including our tax preparation, mortgage and fleet management businesses, and are progressing toward the divestiture of our Wright Express fuel card business and marketing services division in 2005. At the same time, we are reinvesting in our travel and real estate businesses."

Looking ahead, Cendant expects first-quarter EPS from continuing operations of 1 cent to 5 cents. That includes an 18-cent to 20-cent impact from transaction-related charges. On average, Wall Street analysts are expecting first-quarter EPS of 23 cents, but it's not clear whether their forecasts take into account the charges.

For all of 2005, Cendant forecasts EPS from continuing operations of $1.15 to $1.25, including the first-quarter transaction charges. The analyst consensus is for $1.40, according to Thomson First Call.

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