DuPont Profit Nearly Triples; Sales Rise
asia.reuters.com
Tue January 28, 2003 10:20 AM ET
WILMINGTON, Del. (Reuters) - DuPont Co. DD.N , the No. 2 U.S. chemical company, on Tuesday said fourth-quarter profit, excluding a huge one-time gain a year earlier for selling its drug business, nearly tripled with stronger sales of everything from nylon and spandex to automotive paint.
Including the gain, its net earnings fell sharply.
DuPont, whose chemicals are used to make products ranging from Stainmaster carpets to Teflon coatings, has been cutting jobs and closing plants for the past two years to cope with soaring energy prices and lower spending by manufacturers. It has already announced plans to eliminate at least 5,500 jobs.
Now the company -- a component of the Dow Jones industrial average -- says it is starting to see "modest growth" in many of its businesses and its revenue for the quarter rose about 8.6 percent to $5.68 billion.
DuPont is not entirely in the clear, however. Chemical prices are still relatively depressed, pension expenses are up and energy costs have been climbing steadily higher as the United States has made preparations for a possible war with Iraq.
Unless business or world events change dramatically, the company said its earnings in the first-quarter would be similar to what they were a year ago, which would be below most current analysts' estimates.
But after a recent warning that its fourth-quarter earnings would fall short of expectations, the company actually reported profit that surpassed many forecasts.
Net income fell to $350 million, or 35 cents a share from $3.92 billion, or $3.82 per share a year ago, when its results were heavily influenced by a huge gain from the sale of its pharmaceuticals business.
Stripping out one-time items, profit rose to $345 million, or 34 cents a share, from $124 million, or 12 cents a share, a year ago. Its fourth-quarter earnings were 2 cents a share above the Thomson First Call consensus forecast.
Shares of DuPont were up 31 cents at $38.77. During the fourth quarter, they rose more than 17 percent, outperforming the Dow Jones, which increased nearly 10 percent during the same period.
EQUITY WRITEDOWN
DuPont, whose total sales are slightly below Dow Chemical Co.'s DOW.N , is not the only chemical company trying to dig out of a long downturn in the chemical market. Smaller rivals PPG Industries PPG.N and Rohm and Haas Co. ROH.N lowered fourth-quarter profit expectations before this month's earnings season, blaming continued weak demand.
Although DuPont showed signs that sales were rising from the depressed levels of a year ago, the entire industry still must deal with high energy costs. Crude oil and natural gas are key components of raw materials used in the industry, and energy prices over recent weeks have been bolstered by concerns about the possibility of U.S. military action in Iraq and a workers strike in Venezuela.
The other threat to DuPont's earnings is increased pension and other postretirement benefit costs. Largely to reflect a decline in the market value of its pension assets, DuPont said it will reduce stockholders' equity by about $2.5 billion after-tax. It also said the combined impact of pension and other postretirement expenses will lower 2003 earnings by 34 cents to 39 cents a share, compared to the prior year.
At the moment, the company expects 2003 first-quarter earnings per share to be roughly similar to prior-year earnings, before special items, when it earned 55 cents a share. Current estimates range from 53 cents to 70 cents a share, with an average of 64 cents.
Strong Volume and Operating Margin Improvements Drive Earnings Growth
new.stockwatch.com
2003-01-28 04:06 - News Release
CINCINNATI, Jan. 28 /PRNewswire-FirstCall/ -- The Procter & Gamble Company announced another period of strong business growth for the quarter ended Dec. 31, 2002. This is the fourth consecutive quarter of double-digit core earnings progress -- and attainment of long-term growth objectives.
For the quarter ended Dec. 31, 2002, unit volume grew eight percent over the prior year, behind double-digit growth in the health care and beauty care businesses, as well as very strong results in the baby and family care business. Excluding acquisitions and divestitures, unit volume increased seven percent. Reported net sales were $11.01 billion, up six percent versus year-ago, as strategic pricing investments and mix partially offset volume growth. The net foreign exchange impacts increased sales by one percent, reflecting the benefits of the Euro offset by Latin American devaluations.
"This was a strong quarter where we exceeded expectations despite a very challenging global economic and competitive environment," said AG Lafley, chairman, chief executive and president of P&G. "At the midpoint of our fiscal, we are well positioned to meet our growth goals for the year. We have the right strategies and we're making the necessary systemic interventions to sustain long-term top- and bottom-line growth objectives."
Net earnings for the quarter were $1.49 billion or $1.06 per share, up 14 percent versus year ago. Results included a $98 million after tax ($0.07 per share) restructuring charge related to the company's program to streamline its operations and business portfolio. This restructuring program charge for the quarter included employee separation costs of $54 million before tax and asset-related charges of $73 million before tax. Net earnings in the year-ago quarter were $1.30 billion or $0.93 per share, including a $146 million after tax ($0.10 per share) restructuring charge.
Core net earnings, which excludes restructuring charges, grew ten percent to $1.59 billion for the quarter. On a per share basis, core earnings grew ten percent to $1.13.
Key Financial Highlights * Core gross margin expanded 140 basis points; this excludes $84 million before tax in restructuring charges in the current quarter and $82 million before tax in the prior quarter. This marks another quarter of significant improvement, consistent with the strong results delivered over the preceding six quarters. This expansion primarily was driven by base business savings, which includes both systemic material price improvements and volume benefits. Restructuring program savings and improved margin mix also contributed. * Core Marketing Research and Administration (MR&A) as a percent of sales decreased about 40 basis points behind reductions in overhead costs partially offset by increased marketing spending, primarily in beauty care. This excludes $57 million before tax in restructuring charges in the current quarter and $121 million in the prior quarter, year-ago. * Core operating income growth was robust, up 16 percent, versus the prior year. Core net earnings increased ten percent despite non-operating gains from the divestiture of Comet in the base period. * The company's free cash flow before dividends for the second quarter was $1.98 billion, representing a $0.45 billion (+29%) increase over the same quarter year-ago. Free cash flow before dividends for the first half of the year was $3.71 billion, representing a $1.20 billion (+48%) increase over the same period last year. This increase was driven primarily by improved earnings growth. Business Segment Discussion:
The following provides additional perspective on the company's October - December results by business segment. Double-digit earnings progress was achieved by each business segment, despite the economic challenges in Latin America.
- Fabric and home care delivered strong results this quarter. Unit volume growth was broad-based, increasing eight percent on continued strength across most regions. Net sales were $3.10 billion, up five percent. Sales growth trailed volume due to pricing adjustments to restage the North American Cheer(R) brand. Also, negative mix in laundry was driven by a strong performance on mid-tier brands, growth in developing markets and larger sizes. Net earnings increased 18 percent to $514 million, driven by higher volumes and gross operating margin expansion from ongoing base business savings projects and lower material prices from systemic purchasing improvements. * Baby and family care quarterly volume, sales and earnings results also were very strong. Unit volume increased eight percent behind global strength in both baby care and family care, driven primarily by the Baby Stages of Development(R) initiative, Charmin(R) in Western Europe and Mexico and in U.S. Bounty(R). Net sales were $2.53 billion, up seven percent. Temporary pricing adjustments in response to competitive activity in both the baby and family care segments were partially offset by a positive one percent foreign exchange impact and positive mix behind strength in premium tier diapers. Earnings increased 21 percent to $276 million, reflecting volume growth and continued cost reductions. * Health care delivered excellent results this quarter with unit volume, sales and earnings all up double-digits. Unit volume increased 18 percent, driven by strong results in oral care and continued strength in pharmaceuticals. Net sales were $1.57 billion, up 17 percent including a one percent positive foreign exchange impact partially offset pricing investments. Crest Whitestrips(R) and Actonel(R) both delivered particularly strong volume and sales growth. Health care's net earnings increased 47 percent to $253 million, reflecting volume growth and positive mix toward high-margin products, partially offset by marketing investments to fuel future growth. * Beauty care posted strong results with double-digit volume, sales and earnings growth. Unit volume was up 14 percent. Excluding the impact of acquisitions and divestitures, volume was up six percent behind strength in hair care, on Pantene(R) and Head & Shoulders(R), and fine fragrances. Sales grew ten percent, including a positive one percent foreign exchange impact, reaching $3.00 billion. Sales trailed volume growth due to mix impacts driven by the Clairol business and the repositioning of the company's hair care portfolio of brands into multiple price tiers to deliver better consumer value. Net earnings were $507 million, up 15 percent behind the strong volume growth, which also funded increased marketing investments. * Snacks and beverages results were mixed. Unit volume was down one percent. Sales grew one percent to $881 million, including a positive two percent foreign exchange impact, as increased merchandising investments in beverages was offset by positive category mix. Net earnings grew 15 percent to $110 million behind positive mix and a continued focus on reducing costs. Third Quarter and Fiscal Year Estimates
For the March quarter, volume is expected to be up six to eight percent versus year-ago, behind continued core business strength. The net volume impact from acquisitions and divestitures in the quarter is expected to be a negative one percent due to the Jif/Crisco spin merge. Sales, excluding foreign exchange, are expected to be up in the mid single-digits versus year-ago. At current rates, foreign exchange is expected to have a positive two percent impact on the topline. As a result of the strong topline growth, core earnings per share is expected to grow eleven to thirteen percent, despite a difficult base period comparison.
For the fiscal year, sales growth is expected to be at the top end of the company's four to six percent target range. At current rates, foreign exchange is expected to have about a one percent positive impact on the topline. Earnings per share are expected to be in the twelve to thirteen percent range for the full fiscal year.
All statements, other than statements of historical fact included in this presentation, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this release, there are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) the achievement of expected cost and tax savings associated with changes in the company's organization structure; (2) the ability to achieve business plans, including growing volume profitably, despite high levels of competitive activity, especially with respect to the product categories and geographical markets in which the company has chosen to focus; (3) the ability to maintain key customer relationships; (4) the achievement of growth in significant developing markets such as China, Turkey, Mexico, the Southern Cone of Latin America, the countries of Central and Eastern Europe and the countries of Southeast Asia; (5) the ability to successfully manage regulatory, tax and legal matters, including resolution of pending matters within current estimates; (6) the ability to successfully implement, achieve and sustain cost improvement plans in manufacturing and overhead areas; (7) the ability to successfully manage currency (including currency issues in Latin America), interest rate and certain commodity cost exposures; and (8) the ability to manage the continued political and/or economic uncertainty in Latin America (including Venezuela) and the Middle East, as well as any political and/or economic uncertainty due to terrorist activities or war (including Korea). If the company's assumptions and estimates are incorrect or do not come to fruition, or if the company does not achieve all of these key factors, then the company's actual results might differ materially from the forward-looking statements made herein.
About Procter & Gamble
P&G is celebrating 165 years of providing trusted quality brands that make every day better for the world's consumers. We market nearly 300 brands -- including Pampers(R), Tide(R), Ariel(R), Always(R), Whisper(R), Pantene(R), Bounty(R), Pringles(R), Folgers(R), Charmin(R), Downy(R), Lenor(R), Iams(R), Crest(R), Actonel(R), Olay(R) and Clairol Nice 'n Easy(R) - in more than 160 countries around the world. The P&G community consists of nearly 102,000 employees working in almost 80 countries worldwide. Please visit www.pg.com for the latest news and in-depth information about P&G and its brands.
P&G will webcast its conference call on Tuesday, January 28, 2003, at 8:30 a.m. to review its second quarter 2002/03 results. The call will last approximately one hour. You may receive the web cast by going to our web site at: www.pg.com
We suggest you check in at least ten minutes in advance of the start time to complete the brief registration process and ensure you are set up to receive the webcast.
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
Three Months Ended December 31, 2002
% Change Earnings % Change % Change
Versus Before Versus Versus
Net Year Income Year Net Year
Sales Ago Taxes Ago Earnings Ago
FABRIC & HOME CARE $3,102 5% $768 16% $514 18%
BABY AND FAMILY CARE 2,526 7% 443 16% 276 21%
BEAUTY CARE 2,997 10% 731 19% 507 15%
HEALTH CARE 1,567 17% 374 42% 253 47%
SNACKS AND BEVERAGES 881 1% 168 17% 110 15%
TOTAL BUSINESS
SEGMENT 11,073 8% 2,484 20% 1,660 21%
CORPORATE (excluding
restructuring costs) (77) n/a (173) n/a (68) n/a
TOTAL COMPANY - CORE 10,996 6% 2,311 10% 1,592 10%
RESTRUCTURING COSTS 9 n/a (132) n/a (98) n/a
TOTAL COMPANY -
REPORTED $11,005 6% $2,179 14% $1,494 15%
Six Months Ended December 31, 2002
% Change Earnings % Change % Change
Versus Before Versus Versus
Net Year Income Year Net Year
Sales Ago Taxes Ago Earnings Ago
FABRIC & HOME CARE $6,234 7% $1,577 19% $1,061 20%
BABY AND FAMILY CARE 4,952 6% 843 13% 517 15%
BEAUTY CARE 6,120 18% 1,535 22% 1,055 19%
HEALTH CARE 2,977 18% 649 37% 449 44%
SNACKS AND BEVERAGES 1,703 2% 290 13% 201 18%
TOTAL BUSINESS
SEGMENT 21,986 11% 4,894 21% 3,283 21%
CORPORATE (excluding
restructuring costs) (189) n/a (294) n/a (114) n/a
TOTAL COMPANY - CORE 21,797 8% 4,600 14% 3,169 14%
RESTRUCTURING COSTS 4 n/a (283) n/a (211) n/a
TOTAL COMPANY -
REPORTED $21,801 8% $4,317 22% $2,958 23%
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
OCTOBER-DECEMBER NET SALES INFORMATION
(Percent Change vs. Year Ago) **
Volume
With Without Total
Acquisitions/ Acquisitions/ Total Impact
Divestitures Divestitures FX Price Mix/Other Impact Ex-FX
FABRIC AND
HOME CARE 8% 7% 0% -2% -1% 5% 5%
BABY AND
FAMILY CARE 8% 8% 1% -4% 2% 7% 6%
BEAUTY CARE 14% 6% 1% -2% -3% 10% 9%
HEALTH CARE 18% 19% 1% -2% 0% 17% 16%
SNACKS AND
BEVERAGES -1% -1% 2% -2% 2% 1% -1%
TOTAL COMPANY
(CORE) 8% 7% 1% -2% -1% 6% 5%
** These sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
OND QUARTER
W/O Restructuring Chgs
OND 02 OND 01 % CHG OND 02 OND 01 % CHG
NET SALES $11,005 $10,403 6 % $10,996 $10,389 6 %
COST OF PRODUCTS SOLD 5,490 5,339 3 % 5,406 5,257 3 %
GROSS MARGIN 5,515 5,064 9 % 5,590 5,132 9 %
MARKETING, RESEARCH &
ADMINISTRATION 3,267 3,200 2 % 3,210 3,079 4 %
OPERATING INCOME 2,248 1,864 21 % 2,380 2,053 16 %
TOTAL INTEREST EXPENSE 143 150 143 150
OTHER NON-OPERATING
INCOME, NET 74 200 74 200
EARNINGS BEFORE INCOME
TAXES 2,179 1,914 14 % 2,311 2,103 10 %
INCOME TAXES 685 615 719 658
NET EARNINGS $1,494 $1,299 15 % $1,592 $1,445 10 %
EFFECTIVE TAX RATE 31.4 % 32.1 % 31.1 % 31.3 %
PER COMMON SHARE:
BASIC NET EARNINGS $1.13 $0.98 15 % $1.20 $1.09 10 %
DILUTED NET EARNINGS $1.06 $0.93 14 % $1.13 $1.03 10 %
DIVIDENDS $0.41 $0.38 $0.41 $0.38
AVERAGE DILUTED SHARES
OUTSTANDING 1,402.6 1,401.5 1,402.6 1,401.5
COMPARISONS AS A % OF NET Basis Basis
SALES Pt Chg Pt Chg
COST OF PRODUCTS SOLD 49.9 % 51.3 % 49.2 % 50.6 %
GROSS MARGIN 50.1 % 48.7 % 140 50.8 % 49.4 % 140
MARKETING, RESEARCH &
ADMINISTRATION 29.7 % 30.8 % (110) 29.2 % 29.6 % (40)
OPERATING MARGIN 20.4 % 17.9 % 250 21.6 % 19.8 % 180
EARNINGS BEFORE INCOME
TAXES 19.8 % 18.4 % 21.0 % 20.2 %
NET EARNINGS 13.6 % 12.5 % 14.5 % 13.9 %
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
FYTD
W/O Restructuring Chgs
12/31/02 12/31/01 % CHG 12/31/02 12/31/01 % CHG
NET SALES $21,801 $20,169 8 % $21,797 $20,131 8 %
COST OF PRODUCTS SOLD 10,979 10,450 5 % 10,812 10,248 6 %
GROSS MARGIN 10,822 9,719 11 % 10,985 9,883 11 %
MARKETING, RESEARCH &
ADMINISTRATION 6,395 6,093 5 % 6,275 5,758 9 %
OPERATING INCOME 4,427 3,626 22 % 4,710 4,125 14 %
TOTAL INTEREST EXPENSE 287 307 287 307
OTHER NON-OPERATING
INCOME, NET 177 222 177 222
EARNINGS BEFORE INCOME
TAXES 4,317 3,541 22 % 4,600 4,040 14 %
INCOME TAXES 1,359 1,138 1,431 1,253
NET EARNINGS 2,958 $2,403 23 % $3,169 $2,787 14 %
EFFECTIVE TAX RATE 31.5 % 32.1 % 31.1 % 31.0 %
PER COMMON SHARE:
BASIC NET EARNINGS $2.23 $1.81 23 % $2.39 $2.10 14 %
DILUTED NET EARNINGS $2.10 $1.71 23 % $2.25 $1.99 13 %
DIVIDENDS $0.82 $0.76 $0.82 $0.76
AVERAGE DILUTED SHARES
OUTSTANDING 1,404.9 1,401.0 1,404.9 1,401.0
COMPARISONS AS A % OF NET Basis Basis
SALES Pt Chg Pt Chg
COST OF PRODUCTS SOLD 50.4 % 51.8 % 49.6 % 50.9 %
GROSS MARGIN 49.6 % 48.2 % 140 50.4 % 49.1 % 130
MARKETING, RESEARCH &
ADMINISTRATION 29.3 % 30.2 % (90) 28.8 % 28.6 % 20
OPERATING MARGIN 20.3 % 18.0 % 230 21.6 % 20.5 % 110
EARNINGS BEFORE INCOME
TAXES 19.8 % 17.6 % 21.1 % 20.1 %
NET EARNINGS 13.6 % 11.9 % 14.5 % 13.8 %
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions)
Consolidated Cash Flows Information
Six Months Ended December 31
2002 2001
OPERATING ACTIVITIES
NET EARNINGS $2,958 $2,403
DEPRECIATION AND AMORTIZATION 844 784
DEFERRED INCOME TAXES 166 115
CHANGES IN:
ACCOUNTS RECEIVABLE (117) (397)
INVENTORIES (89) (139)
ACCOUNTS PAYABLE, ACCRUED AND
OTHER LIABILITIES 73 876
OTHER OPERATING ASSETS &
LIABILITIES 151 (542)
OTHER 340 77
TOTAL OPERATING ACTIVITIES 4,326 3,177
CAPITAL EXPENDITURES (616) (668)
FREE CASH FLOW BEFORE DIVIDENDS $3,710 $2,509
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions)
Consolidated Balance Sheet Information
December 31, 2002 June 30, 2002
CASH AND CASH EQUIVALENTS $5,106 $3,427
INVESTMENTS SECURITIES 218 196
ACCOUNTS RECEIVABLE 3,240 3,090
TOTAL INVENTORIES 3,610 3,456
OTHER 2,017 1,997
TOTAL CURRENT ASSETS 14,191 12,166
NET PROPERTY, PLANT AND EQUIPMENT 13,125 13,349
NET GOODWILL AND OTHER INTANGIBLE ASSETS 13,446 13,430
OTHER NON-CURRENT ASSETS 1,680 1,831
TOTAL ASSETS $42,442 $40,776
ACCOUNTS PAYABLE $2,021 $2,205
ACCRUED AND OTHER LIABILITIES 5,352 5,330
TAXES PAYABLE 1,839 1,438
DEBT DUE WITHIN ONE YEAR 3,491 3,731
TOTAL CURRENT LIABILITIES 12,703 12,704
LONG-TERM DEBT 11,534 11,201
OTHER 3,369 3,165
TOTAL LIABILITIES 27,606 27,070
TOTAL SHAREHOLDERS' EQUITY 14,836 13,706
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $42,442 $40,776
The Procter & Gamble Company
CONTACT: Media - P&G Corporate Media Center, Inside US, +1-866-776-2837,
or Outside the US, +1-513-945-9087, or Investors - John P. Goodwin, of The
Procter & Gamble Company, +1-513-983-2414
Web site: www.pg.com
Investors finally wising up to war
Tuesday, January 28, 2003 – Page B2
Here's a vexatious little puzzle: The markets have known for many months that U.S. President George W. Bush was intent on toppling Iraq's Saddam Hussein. Remember the "axis of evil" speech? Remember the Bush Doctrine of pre-emptive warfare?
And yet here we are, one year later, and investors appear to have just discovered the concept of political risk. The major indexes are getting hit, hard, by the prospect of war -- belying all the smug assertions of Wall Street strategists who've dismissed Iraq as quick blip on the way to a new bull market.
On Friday, the Dow Jones industrial average plunged 238 points, to its lowest level since last October. Yesterday, during the breathlessly anticipated report by Dr. Hans Blix, the top United Nations weapons inspector, the Dow hovered in the negative 50 range.
But within minutes of Dr. Blix's conclusion, after a short, hawkish press conference by the U.S. ambassador to the UN, the index was off 150. The industrials ended the day down 141.45 points, while the S&P/TSX composite index dropped 108.38.
Now, this has to be the most broadly telegraphed conflict in the history of the planet. The Persian Gulf is an armed camp. No one who reads newspapers or watches TV can be particularly surprised that weapons inspectors have gotten less-than-stellar co-operation from Iraq, or that Mr. Bush is now champing at the bit to get on with his invasion. So we can draw only one of two conclusions. Either investors had, until mid-January, been sticking their heads in the sand -- the Dow rose more than 6 per cent in the first two weeks of this year -- or some nagging worry about the specific nature of the coming war has risen to the fore in the past week or two. Or perhaps both are true.
Consider the benign scenario, based on a read of the market response to the first Persian Gulf war in 1990-91. Mr. Hussein's army invaded Kuwait in August of 1990. By November of that year, National Bank Financial's Vincent Lépine pointed out in a report last week, the Standard & Poor's 500-stock index had dropped 13 per cent.
Stocks then ground along a bottom until the onset of Operation Desert Storm, on Jan. 17, 1991. That day, the S&P rose nearly 4 per cent. By the end of the war on Feb. 28, the S&P had surged 12 per cent. Financials rose 19 per cent, information technology 18 per cent, and cyclicals 16 per cent. After that, barring a brief correction late in 1991, it was smooth sailing -- and onward to the greatest bull market ever.
There are parallels between the situation now and then. From mid-1990 until early 1991, for example, the greenback dropped about 10 per cent on a trade-weighted basis, similar to its weakening this time round. The U.S. dollar bottomed in the middle of the 1991 war, Mr. Lépine notes, and had recouped most of its losses by the fall of 1991. Lack of confidence in the U.S. dollar, primarily from overseas, has been a source of recent selling pressure on stocks.
Then, as now, the United States enjoyed an overwhelming military advantage. Indeed, in many respects, that advantage is far greater now, because 70 per cent of Iraq's conventional military was destroyed in 1991 and was never rebuilt, whereas U.S. smart-bomb capability has continued to shoot ahead. Most military analysts expect Iraqi forces will either surrender or be overwhelmed within days.
So why is the market rather suddenly taking this so hard?
For one thing, the United States this time round is politically isolated. Despite bluster to the contrary from senior Bush administration officials, no country -- not even Britain -- is unreservedly backing the U.S. push for war. The lack of a coalition removes a level of restraint.
Second, no one knows what carnage may ensue when U.S. forces move into Iraq's cities. Third, the government of Israel in 1990-91 was compliant and willing to remain sidelined, in the interest of keeping Arab allies on side. The current Israeli regime has sworn to strike back if attacked. Fourth, the oil supply outlook is far tighter now than it was in 1990. Venezuela remains crippled by a political crisis and OPEC has little spare production capacity.
Fifth -- and this is the kicker, for investors -- the S&P 500 was trading at about 15 times trailing-year earnings when the gulf war began. Today, the broad market trades at 26 times.
mdentandt@globeandmail.ca