Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-27

been able to compete on an equal plane
with larger companies because of the
sharp fluctuations in crude rubber
prices. Their requirements were of
small enough proportions to enable them
to buy crude rubber at market prices
as they needed 1t, thus eliminating the
heavy contracts at uncertain prices
Which the larger companies were forced
into in order to be assured OF sufficient
supplies. This price advantage of the
smaller companies offset the advantages
Of efficient large scale production en-
joyed by the larger companies If, how
ever, the price of crude rubber is
steadied, the smaller companies will lose
their advantage and competition will
become more strenuous for them.
Uncertainty Causes Wide Fluctuations.
The earnings of the rubber companies
have been difficult to diagnose during
the past few years 1t was well known
that those companies which had con-
tracted for several months supply Of
crude rubber in advance would profit
when the price Of rubber rose, and lose
heavily If the price declined. But 1t
was never known just how far the
companies had committed themselves.
Then, too,< the accounting methods OF
tIlc CUtIipdklicS val leu oO WAuCAy biAdt
sometimes profits or losses might be
carried over to future date.
Rubber securities, therefore, have
fiuctuated widely. Although normal
conditions are at last prevailing within
the industry. there are still enough I'M
certainties regarding the future. so that
there probably will still be wide varia-
tons until the industry has become
fully accustomed to present conditions.
Goodyear.
The remarkable showing Of Goodyear
in 1928 is regarded as phenomenon
by the tire industry. This company
consumes one-Sixth of the worlds sup
ply of rubber. In spite Of the severe
drop in rubber prices. which meant
losses for other manufacturers, 1t
earned $7.31 a share, compared with
an average of $4.25 for the previous
six years. An increase of IS per cent
in volume of sales over the previous
year was partly responsible. and a
cost plus contract to supply Sears-Roe-
buck played large part. Since July
Goodyear stock has risen sharply. Cur
rent earnings have undoubtedly played
an important part in the rise, but many
believe that a contest for control OF
the company. together with an attempt
to make the recent comrnon stock orer-
ing more attractive. also have had an
effect upon stock prices.
Goodrich.
The Goodrich Co has long been con-
sidered one of the best managed units
in the industry While earnings have
f1uctuated widely, last year amounting
only to SLAB, average earnings over
the previous six years were $8.l7. Good
rich maintains a good balance between
tires and other rubber goods, which
helps to iron out seasonal production
problems. Some believe that Goodrich
will reach it's 1927 earnings of about
SIS again this year.
Firestone is one Of the largest pro-
ducers and has substantial interests IN
rubber producing properties, but since
the stock is closely held, it IS difficult
to obtain detailed statistics Of its opera
tin. Its stock fluctuated widely during
the years of great uncertainty.
United States.
United States Rubber, which has
shown no great progress during the past
five years. has recently come under con-
troll of Du Pont interests. With this
change, it Is believed that many econ
omies will be affected and that the close
relationship thus affected with General
Motors, largest tire consumer. will be an
advantage. The company took heavy
loss on crude rubber last year. which
was intensified by ultra conservative ac-
counting methods. Stock financing has
recently been accomplished. which i'm
proved the company's financial struc-
ture. and it is estimated that with crude
rubber at present prices the company
can easily make a profit of S. a share
in 1921, from its plantation and manu-
featuring activities.
Fisk
Fisk is one of the largest producers
and like U. S., its extra conservative
accounting methods last year intensi-
fled loss on its common stock. Fisk
has done rather well, however, con-
sidering the conditions in the industry
during the past six years, averaging
50 OF per common share. One of Fisk's
main difficulties is its heavy funded
debt. In order to protect itself last
Fall, 1t passed the dividend on the pre-
ferred. Conditions since have picked
IN rapidly and it is now showing good
earnings. Fisk's contract with Chrvsler.
Dodge is reputed TO be very profitable