Business: At the Half

As U.S. business balanced its books for the first half of 1960, profits often fell short of record 1959. The reason was no big slump in business—most sales were as good as or better than last year—but rising costs that chewed up profits, and high inventories caused by overoptimistic expectations. With the U.S. consumer presumably poised to buy at an even faster clip in the second half of 1960, most businessmen were confident that better profits were on the way.

Compact Pangs. U.S. motorists found the new compacts just their size, and auto sales boomed. G.M. racked up an alltime record for the industry in the first half, with sales of $7.1 billion, earnings of $2.15 per share v. $2.08 in the first half of 1959. Though Chrysler's first-half sales were up 14% to $1.75 billion, earnings thudded from 1959's $6.65 per share to $2.69. The principal reason, explained Chrysler Chairman Lester Lum ("Tex") Colbert, who was also deep in other troubles (see below), was "lower profit margins on the economy-type cars." Ford felt the pangs of the compacts' success the most (42% of Ford cars sold in the second quarter were compacts) : though Ford sold more cars in the first half of this year, its dollar sales declined and so did its earnings, from $5.22 to $4.83 per share. American Motors, first with the compacts, was the only automaker to turn a better second-quarter profit than last year, earned 96¢ per share v. 90¢ in the second quarter of 1959.

U.S. steelmakers, whose fast recovery from the steel strike led steel users to overbuild inventories in the first quarter, had a bad second quarter as orders fell off and production dropped below 50% capacity. Earnings of U.S. Steel were $3.35 per share in the first half of 1960, down from $4.50 last year. But Big Steel Chairman Roger Blough predicted a "modest and gradual rise" in output for the rest of the year, forecast that the mills would operate at 55% of capacity in the third quarter. Jones & Laughlin first-half earnings were $3.24 v. $5.31 in 1959. Bethlehem earnings dropped 92¢ from last year's first half to $1.72 per share, but Bethlehem President Arthur B. Homer, noting that July orders were running ahead of shipments, looked hopefully ahead: "This year isn't going to be so bad if present indications prove correct."

Other half-year earnings (per share):

OILS 1960 1959

Standard Oil of Calif. $2.03 $1.87

Gulf Oil 1.56 1.42

Shell Oil 1.14 1.14

Texaco 2.93 2.78

Standard Oil (N.J.) 1.45 1.47

DRUGS & CHEMICALS

Colgate-Palmolive 1.15 1.37

Rexall Drug & Chemical .92 .90

Johnson & Johnson 1.34 1.30

Pfizer .78 .69

METALS

Alcoa .96 1.32

Reynolds .66 1.10

TOBACCOS

Philip Morris 2.62 2.44

American Tobacco 2.13 2.13

U.S. Tobacco .85 .93

MISCELLANEOUS

Union Carbide 2.70 3.00

Pepsi-Cola 1.03 .97

Eastman Kodak 1.42 1.36

U.S. Rubber 2.77 2.85

F. W. Woolworth 1.60 1.44

Continental Can 1.05 1.54

Motorola 1.62 1.52

Minnesota Mining & Mfg. .63 .58