The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-01-16
HIGH COSTS AFFECT
ARMOUR EARNINGS
Profit for the Year Reaches
Rate of 1.8 Cents q Dol
lar of Sales.
NET INCOME S15,247,838
Report BIames Wages, Taxes
and Other Items for Big
Reduction.

Record costs for labor. taxes and
o,rer expenditures during 1918 brought
about a substantial reduction in the
profts OF Armour & Co. according to
the annual report Of that organization
made public yesterday. The gross
volume Of sales during the year was far
and away the largest on record, but In
spite OF this the net profit, according to
the report. was at the rate OF is cents
on dollar Of sales, against 81 cents In
1917. Tho net income for the year was
sl5,247,s3S, or at the ratio OF 49, per
cent on the common stock after pro-
VISIONS fcr preferred dividends.
IN explaining the extraordinarily high
prices Tor meat which have prevailed
during the last year. the report says:
'Our labor costs last year were 500, 00o-
900 more than the preceding year. The
same number OF pounds OF live stock
cost ia In 1918 slo0.ooo,0o more than
in 1917. The United States Government,
through the agency of the Food Admin
istraton compels us to pay a minimum
Of $3.50 hundred pounds. live weight,
Tor hogs, which cannot ut that figure
produce cheap bacon, pork and other hog
products. Cattle at SIC or more hum
dred pounds on the hoof cannot produce
cheap beef. While the extraordinary
demand from Europe continues there Is
little prospect OF lower prices"
"Helped Win the War"
In the report the company complains
that action taken by the Food Admins
tration with respect to limitation of
its earnings was far too drastic. The
nd a.
through the Food Administration. for
INFLATED on November J., 1917, reGula-
tons limiting our profits In a more dras-
tic manner than prescribed for any
other industry. Thus our profits were
limited to 20 per cent. on our volume
and per cent. per annum on the cap
ital invested in the meat producing
lines We were able to earn only a
very small fraction of the amount al
lowed on volume. and only about one
half OF the authorized return on in
vested capital. We are more than
recompensed for the greatly lessened
profits by the satisfaction which comes
from the knowledge that our company
Was a factor in winning the war. Our
ability to meet the tremendous food de-
mands of the fighting millions in Eu-
rope. an ability made possible only by
the magnitude. the scope and the eff
cheney OF our organization, was of in
sstmable value to the United States
War demands upon the company were
extremely heavy. the report declares.
and to meet them 1t became necessary
70 increase the investment. During
1918. food products OF total value of
33i1 ,o0Q. 900 were delivered by the COM
pany to the United States and its allies
from the plants in this country alone.
The capital increase in 1918 amounted
20 approxirnately 100000, 900. of which
500, 100000 was for additional plant ia
ciities and capital assets and $4,000
900 IN increa sed inventories and out
standing accounts.
Years Net Income S15,24',S3S.
To finance the expansion the company
IN June sold 100000. 900 OF per cent.
debentures. maturing one-siXth a year,
1919 TO 1924 inclusive. and convertible
into the company's new per cent. pre-
ferred stock. Approximately s7,0O0,0O0
OF the debentures have been converted.
the report states, and some 2.40o add
tional stockholders thus have become
Pc II Of the organization.
The income account for the year shows
net income OF s15.e47,s3S. The COM
pany received from manufacture and
sales and other income. after deduction
OF all expenses Incidental to operations.
lEcluQlNS lHDse lot hAINc CA
panses. taxes. insurance. repairs. de-
probation and an estimated reserve for
Federal income and excess profits taxes,
ut not incluting interest on bonds and
borrowed money. t2612s.6l1. Interest
on bonds debentures and current loans
reduced that sum so. 66s.773.
The balance sheet as OF November .,
1918. shows total assets and liabilities
Of s4042s6.360. Current assets total
s0.390.sOs and current liabilities are
Sll5,57S,099.