Earnings: Poor, but Improving

The impact of the recession that everyone hopes is passing plainly showed in first-quarter earnings, which began to come out last week. The overall average decline for 174 of the first companies reporting was 13.2% from the year-ago period; almost every major industry, except possibly cosmetics, felt the pinch. But with the U.S. economy clearly on the way to recovery, most businessmen were confident that sales and earnings would improve in the next quarter.

Not all companies suffered. International Business Machines' first-quarter profit set a record ($2.67 per share) for the period, a 39% gain over the year-ago period. Both Revlon and the Borden Co. also had record first-quarter earnings. American Machine & Foundry's Chairman Morehead Patterson predicted, as quarterly earnings rose to 93-c- a share v. 87-c- a year ago, that 1961 would be "a very satisfactory year."

American Telephone & Telegraph's annual stockholder meeting, held for the first time outside New York City, in Chicago's McCormick Place exposition center, outdrew even the opening game of the White Sox home season. The 18,420 shareholders, the largest number ever assembled for any company's meeting, could hardly have helped being pleased: in the twelve months ending Feb. 28, earnings rose to $1,226,746,000, the greatest profit ever made by any corporation.

Despite the recession, two old-line companies in the chronically hard-pressed aircraft industry made surprisingly strong stands. After a chilling 1960 net loss of $42,934,000, resulting mainly from troubles with the Electras, Lockheed turned in a $4,200,000 (or about 57-c- per share) first-quarter profit. Douglas Aircraft reported earnings of 45-c- per share v. a $1.82 loss in fiscal 1960's first quarter.

Many companies with lower first-quarter earnings reported that they had already begun to shake off the slump. As the first major steelmaker to report, Republic Steel foretold improving industry conditions. Though per share earnings fell to 37-c- from $1.80 last year, Republic's President T. F. Patton said that "an encouraging upturn in orders and shipments developed in March and is continuing."

Two giants of the U.S. rubber industry--U.S. Rubber and B. F. Goodrich--both had reduced earnings. But, said Goodrich's President J. W. Keener: "The recession has bottomed out for us and most of the rubber industry. We expect the trends to be upward for the rest of 1961." Celanese Corp.'s President Harold Blancke, reporting a profit of 32-c- a share v. 50-c- a year ago, noted that his company's earnings trend had been picking up since January.

Other first-quarter earnings (per share) : 1961 1960

Du Pont $1.85 $2.10 American Cyanamid .57 .78 Rexall .48 .42 Parke, Davis .39 .64 Dow Chemical .42 .59 Pfizer .45 .43 Union Carbide 1.12 1.40 Aluminum Co. of America .36 .56 Phelps Dodge .90 .48 Otis Elevator .55 .74 Johns-Manville .25 .55 Texas Instruments .95 .99 Minneapolis-Honeywell .61 .88 Scott Paper .81 .83 Owens-Illinois Glass 1.09 .96 U.S. Tobacco .37 .41 Gillette 1.07 .90 Western Union .36 .43 General Electric .48 .60

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