Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-11

Canary Islands, producing bananas,
sugar, pineapples, cacao, oranges,
grapefruit and other tropical products,
and transporting and distributing them
in all parts of the world.
In addition to the growing and dis
tribution Of these products, the COM
pany carries on general freight and
passenger steamship service over the
Caribbean and operates railroads, tele-
phone and telegraph lines, sugar re-
finery, hotels and many other bust
nesses which were necessary to the
proper development of this region.
Despite these diversified activities, how
ever, the company's principal interests
are bananas and sugar.
In the banana trade. United Fruit
has more than held its own even in the
face of steadily increasing competition.
Being much the largest producer in the
field, 1t Is able to produce at consider
ably lower cost than any of its COMPETE
tors, and income from this one line, as
well as from other interests, has In
creased steadily over a long period.
Sugar Properties Problem.
It's sugar properties are probably the
company's greatest concern. Because
it is forced to pay the import duty
levied on all Cuban sugar, United Fruit
has had little income from this source
for FIVE or six years. Although 1t Is one
Of the lowest cost producers in Cuba, 1t
cannot successfully compete against the
duty-free sugar raised in the United
States and its dependencies. Its re-
flnery in Boston has made moderate
profits, but its plantations have suf-
fered with those of other Cuban
producers.
The difficult sugar situation has held
back q more rapid expansion OF the
| company's earnings which its progress
in other lines justifieS. United Fruit
has always been able to reinveSt ire
mendous sums In the company and
makes q practice Of valuing its proper
ties very conservatively on the balance
sheet.
Earnings on the basis Of the present
stock outstanding have Infatuated be-
tween SITS q share and 1888 share
during the past seven years and have
averaged $3.50. Thus the 81 dividend
rate is covered by comfortable margin.
Based on the regular dividend, the stock
yields only per cent at 134, although
the company has been declaring an
extra dividend of $3.50 for several years
and Just recently declared per cent
dividend to replace this extra $3.50.
United Fruit has still to face the
Cuban situation and the present agita-
ton for tariff on bananas. Probably
these are no more difficult than many
other situations 1t has been overcoming
steadily In Its development in the Cen
trail American states.
Cuyamel Fruit Co.
Cuyamel Fruit is another large COM
pany growing, transporting and market
| ing bananas and sugar cane in the Cen
trail American countries. CuyamerS
] properties are not so widely diversified
as those of United Fruit. Its banana
and sugar plantations and sugar mill
are located in Honduras and Nicaragua.
Most Of United Fruit Co.'S properties
are therefore to the south OF those OF
Cuyamel. Cuyamel operates IA steam
ships and las miles of railroad In con-
nection with its transporting system.
The lines carry general freight and pas
sengers as well as the company's
products.
Cuyamel's earnings during the past
seven years have fluctuated rather wide
ly-between $2.04 and 1854. In 1925
the company thought it wise to conserve
resources and although earnings reached
Sc. % in 1927 and 1922 in 1928, no divi-
dend has been paid. Instead, earnings
have been reinvested in the properties.
Since the company has not a long
enough record of earnings and dividends
it is more difficult to estimate the future
possibilities Of the stock. At its present
price, around rs, the stock Is selling at
is times the average earnings OF the
past six years, although paying no divi-
dend This may be compared to the
United Fruit Co.'S stock, which sells at
l7ha times earnings. United Fruit has
paid dividends regularly and also gen
erous stock dividends.
(Copyright, 1921