Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-11
BY KENNETH 8. VAN srRUM.

BY KENNETH s. VAN STRUM.
NEW YORK, May 1.-THE leading
baking companies have registered such
totally different fortunes for the past
year, some having declined sharply
while others rose as sharply, that each
company must be studied individually
to discover the reasons for its par
ticular trend.
Continental Advertises Nationally.
The promoters Of the Continental
Baking Corporation visualized a holding
company which would control baking
companies in every important section
of the country. The first year of opera
ton the general economies they were
able to effect by large scale produc-
ton brought very satisfactory results.
Shortly afterward, however, profits
began to decline severely. The loss was
attributed to competition. particularly
from the large chain store systems
which operated their own bakeries
A new management in Continental
then established national trade names
to supplant the many brands used by
their local plants. wonder" bread and
Hostess" cake are now advertised ma
tionally, and are even sold through the
large chain stores In competition with
the chain stores own brands. Con-
tinental laboratories continue to i'm
prove their bread formulas.
Earnings had declined steadily from
the company's organization until quite
recently. In the frst quarter of this
year they showed so per cent increase
above last year. At the current rate
the company is earning It's 0 per cent
preferred dividend at the rate Of 50
on the A stock, which Ia entitled to
this amount before the remainder, II
there is any, Is shared equally with the
common.
One Of continentaps greatest dificul-
ties is its heavy capitalization. The
large issue of Q per cent cumulative
ally, while the class A is entitled to so.
or almost $780, 900 more before the
common receives anything. Thus In 1928
90 cents was earned on the 2,000,000
shares Of common, cents in 1925 and
nothing the last two years. II the up
ward trend OF earnings continues, q
small amount might be earned this
year. but a revision In the capital set
up is anticipated before the common
will receive dividends,
Ward Passes Dividend.
While Continental's earnings have
the earnings Of Ward Baking Corpora
ton have declined steadily.
Ward has substantially the same
heavy capital set up as Continental ex-
cept that Its preferred bears per
cent cumulative rate. After the large
issue Of preferred comes class A COM
mon entitled to 80 non-cumulative divi-
dends. Any additional earnings are d.
vided between A and B stock.
The first four years following Its
formation. in 1923, the company was
able TO earn over $40 o share on the
class A stock and better than 50 on the
class D. But although sales were in
creasing steadily. stiff competition kept
profits at standstill.. In 1928 earnings
dropped to 4S.71 on the A and II cents
on the q stock. For the first quarter
Of this year the company earned only
81 on the A and nothing on the D. The
A dividend was passed. 49,
While Ward In In good financial DO
sition, future earnings are difaeult 70
predict because of the competitive con-
ttions within the industry. Ward prod
uets lack the wide national distribution
OF Continental, for It's bakeries are con-
nned TO the section between Chicago
ana New York and along the Atlantic
~SS1s AAOAAt @%OS01 70 6a4tlk10fS.
General Baking Expanding.
Until quitA recently General Baking
corporation had been operating In about
the same territory as Ward, between
New York and Chicago and along the
Eastern sea coast. Desiring a broader
market, the company recently expanded
INTO the South and West o. well as into
other cities in les older territory, 1t evil
IDENTIFY intends to make its Bond Bread"
. national product.
While General Baking has made
fairly steady progress since 1911, its ex-
panSion program has been financed ike
those OF other leading baking companies
ey the issuance OF large amounts Of pre-
terred stock carrying q high cumulative
dividend. AZ present IL has SORTS shares
or per cent preferred and 922, Gao Of q
per cent preferred ahead Of the sara, :
S6l shares of common. Although the
company Is earning the preferred divi-
bends comfortably, the remainder is di.
vlded among such a large amount Of
common that the per share earnings are
small. In 1927 they were 40 cents and
IN 1923 40 cents.
1t Is ofhcially stated that the trend
OF earnings for the last half of la2s
and the first quarter of this year have
been improving as new plants erected
last year are brought into production.
Common dividends are not likely very
soon, however.