MANUFACTURING: Good News

Earnings report of Chrysler Corp. last week vied with those of the aircraft industry (see col. 2) as the most comfortable reading in the U. S. for businessmen. The good news was announced by squarejawed, round-tummied K. T. Keller, president of Chrysler, who published a sensational report. Chrysler’s sales for six months were up 82% from $188,125,465 last year to $342,788,293. But its profits were up fivefold, from $5,709,599 to $25,345,771. While the industry’s car and truck sales rose 47.1% above the first half of 1938, Chrysler’s rose 56.1% (the industry excluding Chrysler rose less than 40% in spite of the effect of the May-June strike troubles on Chrysler). Meanwhile, Chrysler common (currently selling under $80, paying at the rate of $8 a share) yields 10%.

Main reason for Chrysler’s progress profitwise was one fact: its Dodge unit is the industry’s No. i earner (average 1929-37 profit $65 a car) and Dodge sales increased 98.4%—from 54,792 to 108,719 cars—nearly twice as much as Chrysler as a whole.

Italics have to be put on Chrysler earnings because of its Spartan depreciation policy. In the first half of 1937, on sales of $409,688,254, write-off to depreciation was $9.952,822. In the first half of 1939, on sales down to $342,788,293, Chrysler’s write-off was upped even further to $11,311,840. Result: its half-year earnings amount to 11.5% of the assets on its books. Further result: a clean capital structure, written-off assets, low costs—all of which promise that if business gets better Chrysler profits will pyramid, if it gets worse Chrysler will be able to take it.