Far into the Black

The Big Two of U.S. industry--autos and steel--last week reported the second quarter's most dramatic earnings.

In autos, bounding back from the red ink of 1958, Ford Motor Co. led the march far into the black. Chairman Ernest Breech reported that Ford's second-quarter earnings of $2.76 a share (Ford lost money in the same quarter last year) were the highest for any quarter in the company's history, lifted Ford's half-year earnings 1,676% over last year, to a record $5.22 a share. Though Ford's second-quarter sales were only $3.7 million higher than the first quarter, its profits rose $16.3 million, demonstrating what automen have long known: once they hurdle the hump of initial cost and keep on selling, the profit dollars pile up with amazing speed.

Big & Small. At Chrysler Corp., hardest hit of the big automakers in last year's sales slump, the comeback was equally bouncy. Saddled with a loss for both the second quarter and the entire year of 1958,

Chrysler rolled up near-record earnings of $4.90 a share in this year's second quarter, hiked half-year earnings to $6.65 a share on a sales gain of 42% over last year. The news seemed so good to President Lester Lum ("Tex") Colbert that he hastened to warn stockholders against expecting too much in the second half because of lower production schedules and the cost of building and introducing 1960 models.

The small cars sped along the road to plenty side by side with their bigger brothers. American Motors, which made money through 1958, is outdoing itself in 1959. From President George Romney came a beaming report of April-June earnings of $2.70 a share, more than double last year's performance. American's nine-month earnings for fiscal 1959 ($8.36 a share) are running three times ahead of last year, came within only a few thousand dollars of the $50 million profit forecast for the whole year. In South Bend, Studebaker-Packard President Harold E. Churchill gave his fast-selling Lark full credit for the company's earnings of $1.87 a share for the half year, v. last year's loss of $13,314,164.

Good Sports. The vanguard of earnings from the nation's struck steel companies confirmed estimates that steel had had a record half-year. Inland Steel doubled its earnings for the half to $2.43 a share, but was outshone by the performance of other reporting companies. Allegheny Ludlum raised its half-year profit 802% to a record $3.20 a share, Jones & Laughlin hiked profits 642% to a record $5.31 a share, and Crucible Steel ran up a new record with earnings of $2.22. Seeking to explain the high steel profits, Jones & Laughlin's President Avery C. Adams pointed out that steel mills in the second quarter operated at 94% of capacity v. 55% for last year's second quarter. But he also noted that the $676 million spent by the company on cost-cutting, modernization and expansion in the last decade has a lot to do with the record profits. Kaiser Steel credited its $214 million expansion program with lifting its six-month profit 122% over last year, to $2.61 a share.

With the major steel companies about to weigh in with more record earnings, Adams was not the only steelman who felt slightly uncomfortable at announcing record profits in the middle of a strike for higher wages. Said an officer of U.S. Steel, the industry's leader: "Our earnings are pretty large. I guess they could come out at a better time. But we are taking it like good sports, proud to have done so well. Even after wage-cost push, depreciation, wasteful practices and such, we still have an awfully big hunk of dough left over."

Other half-year earnings (per share):

Chemicals 1958 1959 Du Pont $3.08 $4.61 Wyandotte .14 1.22 Freeport Sulphur .79 .91 Union Carbide 1.66 3.00 Olin Mathieson .74 1.32 Thiokol .22 .65 Rails 1958 1959 Pennsylvania Railroad loss $ .48 New York Central Railroad loss 1.56 Miscellaneous RCA $ .86 1.29 B.F. Goodrich 1.60 2.18 Kennecott Copper 2.07 4.32 Libbey-Owens-Ford .57 3.16 Pepsi-Cola .85 .97 American Machine & Foundry 1.38 2.27 Texaco 2.37 2.79 National Distillers .88 1.05 National Cash Register .96 1.07 Phillips Petroleum 1.55 1.06

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