Better Than Ever?

Are profits this year equal to the profits of record-breaking 1947? As a spate of first-quarter reports came out last week, the answer to this $17.4 billion question seemed to be a pleasant yes--and then some. For many a company, first-quarter profits were even fatter than the net for the corresponding period last year.

Of some 200 corporations reporting, only six were in the red. About 60% of the rest showed gains. The oil industry, which was able to increase production with little rise in costs, was well out in front. Typical: Sunray Oil Corp., with a profit of $4,126,025, was up 98% over the same quarter last year.

The railroads, blessed with a series of rate boosts, were climbing fast, though some had been nipped by the coal strike. Example: Robert R. Young's coal-hauling Chesapeake & Ohio netted only $4.3 million, down 60% under last year.

Up Volume. The steel industry expected its earnings to be down also, because of rising material costs. Republic Steel, first of the big steel companies to report, showed a 21% drop in its net to $9 million. U.S. Steel estimated that its first-quarter profits would be "lower" also. Nevertheless, it thought it good policy to cut its prices last week (See NATIONAL AFFAIRS).

In liquor, chemicals, textiles and building materials, profits improved almost without exception; utilities and food packaging were not far behind. In most cases, profit margins were no higher than last year, but volume was up. Some typical nets: $23 million for Union Carbide & Carbon Corp. (up 20% over the first quarter of 1947); $1.5 million for National Gypsum (up 15%); $2.1 million for Wm. Wrigley Jr. Co. (up 18%).

General Electric's C. E. Wilson found that his price cuts last January had not hurt him at all, because business volume had increased. G.E.'s net of $25.3 million was a whopping 42% over 1947's first quarter. In fact, Charlie Wilson thought he could afford to cut prices again, saving his customers $10 million a year.

Down Prices? Westinghouse Electric Corp.'s President Gwilym Price took a hard look at his books, and cut prices also --a $3.1 million saving for customers. Westinghouse's first-quarter net of $13.1 million was up nearly 20% above last year. More than that, said President Price, new orders booked in the first quarter this year were higher than in any other peacetime quarter.

Many another bigwig agreed with Price that the boom seemed solidly shored up by orders. Blaw-Knox Co. (makers of industrial equipment), whose net was up slightly, said that its backlog was "not only the largest in the company's peacetime history, but well diversified." Montgomery Ward, whose first-quarter profits (an estimated $24 million) were up 18%, said that its entire capital was "at work in the business" for the first time since September 1942.

Stockholders were also doing better. The Department of Commerce reported last week that publicly listed cash dividends of U.S. corporations in the first quarter totaled $1,332,000,000 -- 16% more than in the corresponding period last year.

Looking at all this, many a consumer wondered if it wasn't time for the rest of industry to follow the lead of G.E., Westinghouse and Big Steel, and pass some of the benefits on in price cuts.

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