Earnings: Best Ever?

As the stream of earnings reports reached flood stage last week, it appeared that 1955's first quarter was the best ever for many U.S. corporations. The combined first-quarter earnings of 484 corporations was 27.2% higher than for the same period a year ago, dividend payments to stockholders were up 6%, and only 17 companies failed to show a profit.

Even in corporations where profits were down because the upswing in business was not yet reflected in earnings, officials were optimistic. Westinghouse Electric's first-quarter earnings fell from $26,286,000 for the first quarter of 1954 to $12,782,000 this year; Pullman Inc. earned only $1,275,873 this year v. $4,197,701 in the first three months of 1954. But, with orders piling up, both companies think they will do better in the rest of this year.

Earlier Birds. Other corporations, in on the recovery from the start, reported big gains in first-quarter earnings. The steel industry set the pace ; combined first-quarter earnings of 33 steel companies were almost 70% higher than a year ago. U.S. Steel, by earning $72,652,402 in 1955's first three months, topped the record of $61,379,757 for that period, set in 1917. And, said Board Chairman Benjamin Fairless, earnings and production for the full year should be better than any previous year except 1953. Not to be outdone, Bethlehem Steel announced that its first-quarter earnings of $35,313,262 were also the best it had ever done in that period, declared a dividend of $1.50 a share. The outlook for the rest of the year was so good, said Board Chairman Eugene Grace, that Bethlehem will operate at 100% of capacity at least through July and capacity for the full year should average at least 90%.

The big automobile manufacturers were doing just as well. General Motors reported that it earned $309,406,862 in the first quarter, a 64.7% increase over last year. But the independent automakers were still having a tough time. Stude-baker-Packard has not yet announced its earnings for the quarter, but did report that only in March, the last month in the quarter, it had managed to operate in the black. Kaiser Motors, however, an almost chronically profitless independent automaker, earned $1,207,113 during 1955's first quarter, v. a loss of $7,509,340 in the same period a year ago.

Even Railroads. The railroads, deep in a slump a year ago, made a strong comeback. The first 35 railroads to report had combined earnings that were 77% ahead of last year's first quarter. The New York Central's Board Chairman Robert R. Young announced that in the first quarter, President Alfred Perlman turned in earnings of $11,813,010, compared with a deficit of $473,788 a year ago. Then Young announced a "regular" dividend of 50-c- a share, the same amount the road paid in January. Other less embattled railroads showed equally good profits. The Santa Fe earned $15,958,209 in the first quarter, v. $12,495,551 last year; in the same period the Pennsylvania earned $7,112,005 v. a deficit of $5,898,894 in 1954.

High Flying. The nation's biggest chemical company did better than it ever had before. Du Pont topped its old first-quarter high of $89,721,254, set in 1953, by earning $93,736,360, and Monsanto saw its earnings go almost 50% higher than they were a year ago ($8,757,702 v. $5,888,948). Giant Standard Oil Co. (N.J.) estimated a net of $177,000,000, a record first quarter for the corporation. Most of the nation's airlines were flying high. In the first two months of the year, American Airlines earned $3,989,000 v. $179,000 in the same period a year ago; Eastern earned $6,146,000 v. $3,775,000, and United made $642,000 v. a loss of $1,418,000. Trans World Airlines was the only member of the Big Four that failed to better its 1954 showing, losing $1,147,000 during January and February, compared to a loss of $1,058,000 a year ago. President Ralph Damon ascribed the loss to $1,500,000 of non-recurring expenses and called April business "wonderful."

Earnings in the aircraft industry were up and down. In the first quarter the Glenn L. Martin Co. earned $4,391,699 before taxes v. $2,407.061 last year. But Boeing's profits were down to $6,040,613 in the first three months of the year v. $8,378,442 last year. Lower commercial transport deliveries in the first quarter were largely responsible for Douglas' decline in earnings from $8,899,596 last year to $7,110,794 this year. But all of the companies predicted that deliveries scheduled for later this year will improve their showing.

In almost all other industries the reports were glowing. Borg-Warner. by earning $9,151,118, broke its previous peak for the first quarter of $6,340,112, set in 1953. And Alcoa earnings were up to $17,074,167 v. $8,372,105 a year ago.

Despite the glowing reports, the stock market had a rough time of it last week. Earnings, good though they were, did not quite come up to the great expectations in some cases, e.g., Bethlehem stock dropped 8 3/8 because investors had expected an even higher dividend. As a result, the Dow-Jones industrial average, which reached an alltime high of 430.64 early in the week, dropped 7.45 points before it steadied at week's end. Traders were finding that a good earnings report would not necessarily boost a stock, while a less-than-hoped-for report, even though it showed a big increase in profits, could bring the stock down.

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