Another Notch

The first big cross section of second-quarter earnings reports confirmed the good news already indicated by scattered early returns. Though some companies and industries were caught in inflation's cost squeeze, sales were better than last year for most, and profits were climbing to new records.

The most optimistic report came from the biggest company of all: American Telephone & Telegraph Co. "With no letup in activity," announced A.T.& T. President Frederick R. Kappel, the Bell System's second-quarter operating revenues totaled $1.6 billion, with a net income of $208.5 million, both about 10% better than last year and both new records for the quarter. Parent A.T.&.T.'s net alone climbed to a record $167.9 million v. $153.2 million in 1956, might soon be even higher. Said Kappel: "At present, the rate of earnings on the capital invested in the Bell System is 6.8%. We are convinced that the rate should be higher, and are working to that end."

New Records. Standard Oil Co. (N.J.), the world's biggest oil company, was close behind. Despite a drop in demand, Chairman Eugene Holman estimated second-quarter earnings at $188 million, somewhat below the first quarter but still enough to push the company's first-half net to an alltime peak of $425 million, some $33 million better than 1956. On a smaller scale, California's Superior Oil Co. did even better, with nine-month (ending May 31) profits of $15.7 million (equal to $37.20 per share), for a 412% jump over the previous year.

In steel and retail trade, the picture was much the same. Republic Steel Corp., the nation's third biggest producer, estimated a record six-month profit of better than $51.5 million, expects to set new highs all around for 1957 as a whole; Jones & Laughlin Steel Corp. and Lukens Steel Co. both bettered last year's records, Lukens with a 16.2% jump to profits of $2,613,666 for the second quarter. Safeway Stores, Inc. reported a second-quarter profit of $7,390,260, some 33% better -than 1956, while Macy (R.H.) & Co., Inc. predicted sales for its fiscal year ending Aug. 3 at just under $450 million, with profits of at least $6,800,000, up $452,000 from last year.

As usual, there were some minuses scattered among the plus signs. The slumping U.S. paper industry, beset by a drop in demand and steadily rising costs, reported uniformly lower earnings. International Paper Co. dipped from $21.4 million in 1956's second quarter to about $16.5 million in the same period this year; Brown Co. and Mead Corp. were down 5% and 10% respectively. Devoe & Raynolds Co., Air Reduction Corp. and Grace (W.R.) & Co. reported that first-half earnings were lower than last year's levels.

Picking Up Speed. Detroit's automakers seemed to be picking up speed after a slower-than-expected start in 1957's auto market. While no company has announced its quarterly earnings, gains over 1956 were freely predicted. Auto dealers reported a surprising boomlet at the end of June, which pushed sales for the month to 544,750 units and the best figure since March 1956. The June comeback boosted overall sales for the first six months of 1957 to within 2.3% of the 1956 mark, after they had been 5% behind at the end of the first quarter.

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