Earnings

"Just think of it!" crowed President Eugene Gifford Grace of Bethlehem Steel fortnight ago after announcing his company's 1936 profits. "We earned a net of $13,901,000 last year against $4,291,000 in 1935, and started 1937 with $123,690,000 of unfilled orders on our books. We have never faced anything like so good a situation in peace times. Why, we started the extraordinary year of 1929 with only $86,000,000 of unfilled orders on our books."

Even more remarkable than his figures was Mr. Grace's own exuberance. Perhaps to counterbalance the perennial cheer of his colleague, Bethlehem's aging Chairman Charles Michael Schwab, hard-boiled Mr. Grace in interviews or statements is usually given to gloom. In his Manhattan office Mr. Grace now proudly declared: "We had tried in our December distributions to both preferred and common stockholders to use up all profits . . . on account of the tax on undistributed surplus. But we missed by a wide mark. We will pay to the Government about a quarter of a million dollars under that tax for 1936."

By last week, with reports in for 1936 from nearly all the rest of the steel industry, Bethlehem's figures did not by comparison look so startling. Ernest Tener Weir's National Steel Corp. announced the highest earnings in the company's history--$13,171,000 before undistributed profits tax of $629,000 as against $11,136,000 the year before. Tom Mercer Girdler's Republic Steel, busy last week with a deal to acquire Gulf States Steel Co., earned more than twice as much in 1936 as in. 1935--$9,586,000 compared to $4,455,000. Inland Steel's profits were up from $9,417,000 to $12,888,.000. Youngstown Sheet & Tube's from $1,597,000 to $10,564,000.

Even that lumbering colossus, U. S. Steel Corp., outdistanced most Wall Street dopesters, turning in a $20,000,000 fourth quarter with operations at 66.2% finished capacity. Profits for the full year footed up to $50,525,000, largest since 1930 and a phenomenal improvement over the piffling $1,146,000 earned last year. On the strength of this report and the involuntary aid of a flock of bears caught short of the stock, U. S. Steel was run up to $100 per share, par, highest price in six years.

Meanwhile the rest of U. S. Industry, light and heavy, was pouring forth additional data on the end of Depression. Gains were widest in capital goods industries like steel, whose markets contract and expand directly with the business cycle. After a study of 161 corporations, Standard Statistics estimated that earnings in the capital goods industries were up about 80%, in the consumer industries, about 40%. Bread & Meat-Standard Brands, Inc. (Fleischmann's Yeast, Royal Baking Powder, Chase & Sanborn Coffee) made $14,727,000 compared to a satisfying $12,744,000 in 1935. Ward Baking Corp. made $1,838,000 compared to $1,015,000 in 1935.

In Packing the best gains were made outside the Big Four. Indeed, Swift & Co., No. 1 meat handler of the U. S., reported a sharp drop in profits ($17,651,000 to $12,103,000) in spite of the fact that sales were $831,671,000 and tonnage at an all-time peak. Wilson & Co. showed a slight decline ($4,068,000 as against $4,109,000). Basic reason for this countertrend in a year of expanding industrial earnings was the confusion in meat markets caused by invalidation of AAA processing taxes and the subsequent drought, which forced farmers to slaughter a vast number of animals they could not feed. Although Cudahy Packing increased its profits from $1,211,000 in 1935 to $1,815,000, President Edward A. Cudahy Jr. wrote his stockholders that results "did not come up to our expectations." Stock holders in Armour & Co., however, received more than they had learned to expect in the past--a dividend, the first since 1926. Armour's earnings were up from $9,349,000 in fiscal 1935 to $10,239,000 in fiscal 1936. On sales of $82,000,000, up 12%, John Morrell & Co.. fifth largest U. S. packer, showed a profit of $619,000, nearly twice the 1935 figure.

Shoes & Hats. Like the meat packers, the light industries which helped shoe, clothe and hat the U. S. reported a varied year. International Shoe Co. showed an $8,416,000 profit for the fiscal year through November, a slight drop. Endicott Johnson Corp.'s income ($1,974,000) was also off a little from the year before. But it was a good year for hats. Philadelphia's John B. Stetson Co. swelled its profits from $301,000 to $485,334, while Hat Corp. of America (Knox, Dobbs) reported net income of $923,000 in the year through November compared to $779,000 in fiscal 1935. It was also a good year for clothing. Said President Mark W. Cresap of Hart, Schaffner & Marx in reporting earnings of $484,000 as against $273,000 the year before: "Profits are still small in proportion to sales." Profit margins for American Woolen were even more unsatisfactory, the company's profits dropping from $2,740,000 to $1,929,000. But Manhattan Shirt Co. more than doubled its earnings, the 1936 figure being $438,000.

Dynamite & Bananas. By a wide margin E. I. du Pont de Nemours & Co. topped its best previous figures, both on operations and investments. In 1929 Du Pont made $78,171,000, last year $92,032,000. Du Pont in 1936 took in $44,004,000 from dividends on its 10,000,000 shares of General Motors stock, compared to $42,939,000 in 1929.

Reporting a 14.5% increase in sales of explosives, a 41.8% increase in other nitrocellulose products like artificial leather, Atlas Powder Co. showed profits of $1,430,000 in 1936 as against $1,161,000 the year before. Hercules Powder Co. also famed for its dynamite and blasting powders, reported a profit of $4,284,000, compared to $3,175,000 in 1935. From bananas, ships and sugar United Fruit Co. made $14,176,000 last year as against $10,359,000 the year before. The white-uniformed salesmen who cry their wares from U. S. roadsides helped Good Humor Corp. increase its net income from $291,000 to $404,000. The Fuller Brush Man was apparently turned away from many a doorstep in 1936, for Fuller Brush Co. reported a dip in profits from $261,000 to $169,000. Radio Corp. reported earnings of about $6,100,000, up $1,000,000 from 1935.

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