Earnings: The First Half

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Going into the second half of 1968, the Commerce Department last week reported that in the first six months of the year, the U.S. economy grew at a real rate (i.e., not including inflation) of 5%. In the second quarter, the nation's output of goods and services increased by $19.6 billion, which was only a shade under the first quarter's record $20.2 billion. Corporate profits more than kept up the brisk pace. Among the early reports:

>IBM added up a record-setting quarter, with profits of $213 million, 46% above the same period last year. That brought first-half earnings to $386 million, more than double what the company was clearing in a full year as recently as 1963. Part of the strong surge comes from the fact that the company has increased outright sales (as opposed to leasing) of its computers. Chairman Thomas J. Watson, in a monumental piece of understatement, said "our long-term prospects continue to be very good."

> Chrysler, smallest of the Big Three, has been enjoying the industry's biggest auto-sales increase, and had earnings to match. At a record $84.5 million, its second-quarter earnings were nearly double those of the 1967 quarter. Relatively untroubled by the strikes that hit its bigger rivals, and propelled by hot sales of Plymouth Fury and Dodge Coronet, the company is on the way to its biggest year.

> Du Pont, the nation's biggest chemical manufacturer, increased its profits over the same period last year by 28% to $96 million. It seemed to be a sign that the company, after three years in the doldrums, is in for some better sailing in the near future.

> Allis-Chalmers, the big Wisconsin-based manufacturer, has yet to solve the nagging profit problems that have made it a tantalizing, if so far highly elusive, takeover prospect (latest suitor: Gulf & Western). In the first half of 1968, profits fell 44% from last year's first half (also poor) to a bare $4.6 million on sales of $416 million. Said the company's beleaguered boss, Robert L. Stevenson: "Steps are being taken."

> Colgate-Palmolive achieved record sales ($275 million) and earnings that, at $9.3 million, were 8% above last year's quarter. Significantly, for a company that pulls in 55% of its profits abroad, most of the current, increase was earned at home, where massively advertised new products such as Ultra Brite toothpaste ("gives your mouth sex appeal") have been shining successes.

> Xerox, which turns out yearly profit records with the regularity of its own copiers, seems well on its way to its 16th straight mark. For the second quarter, earnings came to $28 million—a full 22% over the $23 million of the first quarter. All Chairman C. Peter McClough has to do now is to live up to his promise, made ten weeks ago when he became Chief Executive officer, to "keep her growing."

> R. J. Reynolds, which has three of the best-selling cigarette brands (Camels, Winston and Salem), posted record sales ($495 million) and earnings ($36.4 million) last quarter. Still, profits were not much more than a millimeter above the same quarter in 1967 ($35.8 million) and, notably, much of the increase was earned in the company's nontobacco business (including Chun King foods, Vermont Maid syrups).