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Business news in brief

By The Associated Press and Bloomberg News and The New York Times

This article was published August 6, 2014 at 2:44 a.m.


This March 25, 2014 photo shows a CVS store in Philadelphia. CVS Caremark reports quarterly financial results on Tuesday, Aug. 5, 2014.

CVS earnings jump 11% in 2nd quarter

CVS Caremark's second-quarter earnings jumped 11 percent to top expectations, as specialty-drug use helped fuel growth for the drugstore chain and pharmacy benefits manager.

The Woonsocket, R.I., company also said Tuesday that it was raising its earnings forecast for 2014.

CVS Caremark Corp. runs the nation's second-largest drugstore chain with more than 7,700 locations and one of the largest pharmacy benefits management businesses. Revenue from its pharmacy benefits management segment jumped 16 percent and operating profit soared 30 percent, helped by new business and specialty drug growth.

CVS Caremark earned $1.25 billion, or $1.06 per share, in the quarter that ended June 30. That's up from $1.12 billion, or 91 cents per share, in the same quarter a year ago.

The company said revenue climbed 11 percent to $34.6 billion from $31.25 billion in the same quarter a year ago. That also beat the average analyst expectation of $33.42 billion.

CVS Caremark said revenue from its established drugstores climbed 3.3 percent in the quarter despite consumers that executives described as "a cautious purchaser of products" and a hit from its decision earlier this year to phase out tobacco sales from its stores by this fall.

Shares of CVS Caremark fell 10 cents to close Tuesday at $77.27.

-- The Associated Press

Firm buys wind farm, to supply Wal-Mart

Pattern Energy Group LP, the closely held renewable energy developer associated with Pattern Energy Group Inc., bought a 200-megawatt wind farm in Texas that will sell power to Wal-Mart Stores Inc.

Pioneer Green Energy LLC began developing the Logan's Gap project in Comanche County last year and has a 10-year contract to sell Wal-Mart about 60 percent of the wind farm's power, San Francisco-based Pattern said Tuesday in a statement. Terms of the purchase weren't disclosed.

Pattern expects to arrange financing for the project and begin construction in the fourth quarter, according to the statement. It's expected to begin producing electricity in late 2015.

Pattern is the third-largest shareholder in Pattern Energy Group Inc., which began trading publicly in September, according to data compiled by Bloomberg. Pattern Energy Group Inc.'s website says its objective is to acquire power projects, including from the affiliated LP.

-- Bloomberg News

Toyota posts record profit on U.S. sales

TOKYO -- Toyota, the world's biggest automaker, reported that profit unexpectedly climbed to a record last quarter as surging sport utility vehicle sales in the U.S. eclipsed shrinking demand in Japan.

Net income in the April-to-June period rose to $5.7 billion, trumping the $4.8 billion average of 12 analyst estimates compiled by Bloomberg. The Toyota City, Japan-based carmaker maintained its $17 billion profit forecast for the fiscal year ending in March 2015.

Chief Executive Officer Akio Toyoda is clinging to a lead over Volkswagen AG as the world's top-selling carmaker on surging demand for SUVs including its revamped Toyota Highlander and Lexus GX models. Toyota's performance in the U.S. market has softened the blow from falling sales in Japan after the nation's first sales-tax increase in 17 years.

Toyota's net income led the industry for the quarter. Its profit was about 30 percent higher than Volkswagen's $4.4 billion and surpassed the combined earnings at General Motors, Ford, Nissan and Honda.

Toyota is outpacing a growing U.S. auto market headed toward its best year since 2006. The company's U.S. deliveries climbed 11 percent in the April-to-June period, topping the industry's 6.9 percent rise.

-- The Associated Press

MGM income up despite losses in China

MGM Resorts International, the largest owner of casinos on the Las Vegas Strip, reported second-quarter earnings that beat analysts' estimates, helped by an increase in gambling in the U.S.

Net income totaled $105.5 million, or 21 cents a share, compared with a loss of $93 million, or 19 cents, a year earlier, the Las Vegas-based company said Tuesday in a statement. Analysts projected 10 cents, the average of 20 estimates compiled by Bloomberg.

Casino revenue at MGM'S domestic resorts rose 6 percent, driven by table games, while room revenue on the Las Vegas strip also advanced 6 percent. MGM has been profitable in only one of the past four quarters because of interest payments on its $13 billion in debt.

Sales at MGM China fell 1 percent to $828 million in the quarter. Macau, the only place in China where gambling is legal, has seen a slowdown recently related to the mainland economy and a crackdown by the Chinese government on corruption and illegal money transfers that's cooled spending, particularly among high-rollers.

Revenue in the period that ended June 30 rose 4 percent to $2.58 billion, beating the $2.57 billion average of estimates.

MGM shares fell 57 cents, or 2.2 percent, to close Tuesday at $25.88.

-- Bloomberg News

Walgreen's U.K. bid isn't an inversion

Walgreen is near a deal to fully take over the British pharmacy retailer Alliance Boots -- but will do so without moving its corporate headquarters abroad.

The American retailer is closing in on a deal to buy the 55 percent of Alliance Boots that it does not already own, a person briefed on the matter said Tuesday. But the transaction, which could be announced as soon as today, will not include a move to relocate Walgreen's corporate citizenship to a lower-tax country.

Such a move, known as an inversion, would have required renegotiating the existing deal agreement with Alliance Boots, something the British retailer was unwilling to accommodate, the person said.

Inversions have grown in frequency as more U.S. companies weigh switching their corporate headquarters to reduce their tax rates. They take advantage of clauses within the United States' tax code that allow corporations, under certain circumstances, to merge with foreign counterparts and relocate their headquarters.

That would let such companies escape tax rules requiring U.S. corporations to pay taxes on profits earned overseas.

-- The New York Times

Business on 08/06/2014

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