Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-04
EARNINGS REPORTS
INFLUENCE MARKET
Wall Street Believes Stocks
Have Recently Advanced
Further Than Business.
BY CHARLES F. SPEARE.
patch to The Star.

Special Dispatch to The Star.
NEW YORK, March 4-The factors
of poor corporation earnings and pos
sible dividend reductions are again
ments, after having been ignored dur
ing the past two months.
Wall street felt that it had discount
ed these conditions in the low average
of securities last December. It now
takes the view that stocks have gone
ahead faster than the improvement in
business activity and sentiment war
ranted and that they have not recog-
nized the lack of betterment since the
first of this year
Railroad Statements.
The unsatisfactory state of corpora
ton earnings has been emphasized this
week by the statements of the rail-
roads for January, showing reduc-
ton of more than 81 per cent COM
pared with a year ago and loss OF
more than So per cent in contrast with
the net operating income in January,
1929, when business was booming. 1t
also has been evidenced in the prelim-
mary estimates, or "guesSeS," OF net
profits in the major industries, such
as in iron and steel, copper and au-
tomobiles, in the first two months OF
1881. These are in some cases poorer
GI1dn THOSE IOT Tie ldSI QudTIcT u 4SoO'
This quarter showed a progressive re-
duction in net profits, compared with
that ending June 30. A compilation OF
business profits last year, just pub
lished by the National City Bank, mdi-
Gates that while there was a decline
of 80 per cent in the returns of $50
companies in the first half of last year,
the reduction in net profits Of over 900
industrial and merchandising corpora
tons for the entire IL months was 40
per cent. Consequently, and taking the
January earnings of the railroads as q
cue, these being poorer in January than
in December, the inference is that the
final figures for the March quarter 1881
will show that there has been very little
gain in actual earnings applicable to
fixed charges and dividends, although
the groundwork of permanent stability
in business is now being established.
Iron and Steel Losses.
The largest losses in net profits last
wear, according to the National City
Rank survey, were those Of SIG per
cent in iron and steel, SIS per cent
in automobiles, about go per cent IN
automobile accessories, 81 per cent in
textile products, over ~ per cent IN
copper, As per cent in petroleum, Al per
cent in machinery and tools, $50 per
cent III 6l6CIIICdl C1uAPAACAe -
per cent in lumber, 81 per cent In man
order and merchandising, 81 per cent
in agricultural implements ana 81 per
cent in building materials.
The industries which showed increases
last year over 1929 were am'lsements,
6.7 per cent; fertilizer, 29.3 per cent;
tobacco, 8.3 per cent: dairy products,
7.8 per cent: drugs, So per cent, ana
confectionery and beverages slightly less
than per cent. am
The aggregate net profits OF the 300
CORPORATIONS declined 81, 1913 100000 as
between 1899 and 1890. ProfAs last
wear were 1892 ,0o0. 900 less than in 1929
for the same companies. Those OF the
iron and steel producers dropped $780,
OOO, 900, of the automobile manufaetur-
ers SITE, 000, 900, and of the petroleum
companies $285 ,000, 300.
Rate Of Return Reduction.
The change, reckoned from the stand.
point of the rate OF return on capital
and surplus, is shown to have been
from 1873 per cent in 1929 down to
10 per cent in 1880 Out Of the 300
corporations reporting, there were 20
per cent that had deficits before div1-
bends. The groups from which these
deficits drew most heavily wele cotton,
silk and hosiery, apparel, steel, auto
mobile and automobile accessory manu-
facturers, machinery and took. electri-
cal and radio companies, and Cuban
sugar producers, Of which IA out OF 16
reported deficits.
Copyright, 1917