Numbers Strong in First Half But Caution Urged for Future

Numbers Strong in First Half But Caution Urged for Future

By SHELLY GARCIA



Senior Reporter

The San Fernando Valley’s largest public companies turned in a gangbuster performance in the first half of the year, with many firms increasing earnings as a result of revenue growth, not cost-cutting.






The Valley’s 25 largest publicly owned companies increased earnings by an average of 65 percent in the first half of 2003 and revenues rose an average of 18 percent for the period.






The results were stronger yet for the most recent quarter, which ended June 30 for most of the companies reporting. On average, net income more than doubled for the largest area companies and revenues rose by an average of 77 percent.






But anyone waiting to exhale may want to hold off for now.






While the economy has moved two steps forward in the first half, it is also likely to take at least one step back come next year, economists say.






“I think what’s shaping up here is slow, gradual growth drawn out over a longer period,” said Chuck Hill, director of research at Thomson FirstCall. “I don’t think we’re going to have that earlier-in-recovery surge that we usually get.”






Despite the generally positive news, both locally and nationwide, a number of sectors continued to perform poorly and for others, real growth, excluding such things as the effect of the weak dollar, was not nearly as strong as the bottom line numbers reported, Hill pointed out.






“Business spending isn’t picking up to any degree,” Hill said. “There’s some going on, but it’s mainly replacement demand, not expansion.”






That, coupled with a slowdown in consumer spending expected to accompany rising mortgage rates, portends what Hill called “choppiness” in the recovery.






“I think we may get enamored with growth in the third and fourth quarter and think things are starting to look like the normal recovery,” Hill said. “Then I’m afraid it may soften beginning next year when some of the stimulus will run its course.”






Although the especially highValley averages are skewed by the small sample of companies involved and triple digit percentage increases reported by some of those firms, the local pattern nevertheless reflects trends that emerged nationally.






Second quarter earnings for the S