Business: Profits Pinch

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The high cost of doing business, as wages and prices both reached record peaks (see above), was cutting sharply into profits. Last week's outpouring of year-end reports gave some prime examples of the squeeze.

¶In chemicals, Monsanto's profits dropped 8% to $38.6 million, although sales increased almost 4% to $541 million.

Allied Chemical's 1956 sales rose 6% to a record $668 million, but earnings dropped to $47 million from $52 million in 1955.

¶In rails, the nation's No. 1 rail carrier, Pennsylvania Railroad, steamed in with its best total in three years, a 6% rise to $991 million, but income crept up only 1% to $41.5 million. Helped by higher freight rates, Erie Railroad sales rose 9% to $175 million, while profits were up only $200,000, to $8,100,000. Union Pacific's gross income of $514 million bettered 1955's by $5,000,000, but earnings were off $600,000 to $78.6 million.

Some profit pictures were much brighter. Oil-industry earnings were pushed up by heavy demand arising from the Suez crisis. Sinclair's net shot up 13% to a record $91 million in 1956. Socony Mobil estimated earnings at $250 million, up from $208 million in 1955. Shell Oil hit $135.8 million, for an advance of $10.3 million.

The greatest earnings jump was reported by Anaconda Co., the copper-mining giant which is also the biggest U.S. producer of uranium. Profits rose 70% to an alltime high of $111 million, or $12.84 a share v. $7.52 in 1955. Chairman Roy H. Glover showed his confidence in the economic future by announcing a huge new expansion plan. Anaconda will raise more than $100 million by offering 1,734,865 new shares to stockholders on a one-for-five basis. It will be the company's first stock financing since 1929.