Rosy Grey

The first small batch of year-end earnings reports trickled in last week. At a quick glance, 1943 seemed to have been a rosy year for U.S. business, perhaps better than 1942. And even on longer second glance, much of the rosy tint held up under a grey-colored fact. The fact: many a corporation, slashed by renegotiation, squeezed by taxes, soaring costs and OPA ceilings, has reached its profit peak or is already over the hump and on the way down. But the rosy color held up generally because, in spite of everything, most companies were still making big money even with the hump behind them.

An outstanding example is U.S. Steel. Despite near capacity production that boosted gross sales to nearly $2,000,000,000, net profits were down to $63,642,322, some 10% under the preceding year. But to stockholders the shocker was that earnings plummeted so fast in the last quarter that Big Steel failed to make its $1 quarterly dividend (by 19-c- a share) for the first time since September 1942. Increased labor costs and production changes accounted for much of the last quarter's decline.

The performance of Bethlehem Steel was a different kind of surprise. Thanks largely to its shipbuilding operations, which pushed gross sales almost up to Big Steel's, Bethlehem totted up a profit of $32,124,592, up 25% from 1942. Inland Steel held its own for the year, with profit steady at $10,810,574.

High Plateau. The rails, whose spectacular traffic rise has helped them outfoot rising costs, were leveling-off. On their up-&-down profit line, the downs to date were slightly more numerous than the ups. Prime example on the down side: Atchison, Topeka & Santa Fe. With a whacking $65,000,000 rise in its tax bill, profits dropped to $65,839,748 v. $83,548,000 in 1942.

On the up side, small Western Pacific led all the rest. With its main line from Salt Lake City to San Francisco jam-packed with shipments to the Pacific war zone, profits rocketed to $15,205,421, two and a half times those of 1942 and 22 times those of 1941. Against this, the rise in New York Central earnings to $62,729,230 v. $49,082,182 in 1942 seemed comparatively modest, and the sharp drop in Pennsylvania profits to $85,500,000 ($101,468,792 in 1942) seemed almost poor.

Low Dividends. Reports from the consumer industries were still sparse last week. One hint of the trend: gross sales of the R. J. Reynolds Tobacco Co. ballooned to a new high of $414,263,939. But profits were down to $18,562,741, v. $19,860,231 in 1942.

Most corporations, faced with renegotiations, still took a cautious view of the future, especially dividend-wise. The Department of Commerce reported that dividends paid in December brought the year's total to $3,541,400,000, up only $12,600,000 over the preceding year. A large chunk of the rest of profits went into reserves to cushion the shock of reconversion.

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