RJR Nabisco Has 1st Profit Since Buyout
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RJR Nabisco Inc. said Tuesday that it earned $5 million in the first three months of 1991, the food and tobacco conglomerate’s first quarterly profit since its $24.53-billion leveraged buyout two years ago.
The results, a dramatic improvement over a $222-million loss in the first quarter of last year, reflected the success of RJR Nabisco’s campaign to slash its debt and interest expenses.
The company also said international tobacco sales and strong gains in its food businesses contributed to its results.
Revenue rose to $3.47 billion from about $270 million a year earlier.
The firm reported earnings before interest, taxes, depreciation and amortization, or EBITDA, of $940 million, up from $923 million a year ago. EBITDA is a key figure for a company paying down a heavy debt load.
RJR Nabisco underwent a $7.6-billion recapitalization last year and is using the proceeds from new issues of common stock and bonds to repurchase the expensive junk bonds--some of which are now paying more than 17%--that helped finance its buyout.
The bond buyback helped reduce the company’s interest expenses to $601 million in the first quarter from $784 million a year earlier.
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