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Cendant Swings to Profit

It backs the full-year outlook.
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swung to a first-quarter profit on a 7% rise in revenue, and said its plan to split into four separate companies remains on track.

Cendant, which operates hotels, travel reservation services and real estate agencies, earned $70 million, or 7 cents a share, in the quarter, compared with a loss of $82 million, or 8 cents a share, last year. Excluding separation and other costs, the company earned 16 cents a share in the quarter, 2 cents better than the Wall Street forecast.

First-quarter sales rose 7% from a year ago to $4.22 billion, beating the consensus estimate of $4.03 billion, as compiled by Thomson First Call. By segment, revenue rose 1% to $1.43 billion in Cendant's Realogy real estate services unit; rose 4% to $409 million in hospitality services; rose 11% to $407 million in timeshare resorts; rose 13% at Avis to $1.32 billion; and rose 17% to $645 million in travel distribution services.

"Our first-quarter 2006 earnings were at the high end of our most recent estimate primarily due to better-than-expected results at Realogy," Cendant said. "While home sales in California and Florida declined as forecasted, the balance of the country exhibited overall stability in a moderating environment. Our timeshare resorts segment generated double-digit revenue and EBITDA growth, and each of our other reportable segments showed positive revenue trends.

"In particular, our online travel businesses generated 29% growth in gross bookings, lodging RevPAR increased 10% organically, and car rental produced 15% revenue growth, including the first year-over-year price gain since 2004," Cendant said.

The company expects to post core-operations revenue growth of 4% to 6% in the second quarter and core earnings before interest, taxes, depreciation and amortization that is up marginally from a year ago, before separation costs. Cendant said its 2006 outlook "remains substantially unchanged" for its Realogy, Wyndham Worldwide, TDS and Avis units.

The shares closed at $17.57 Wednesday. In late trading, they added 17 cents, or 1%, to $17.74.