Oil Executives Urge That High Earnings Be Placed in Perspective By JOSH FIT/HUGH AP Business Writer NEW YORK (AP) - The oil companies haven't always been the great money makers they are today, but they've never been paupers either. In 1972, a year most analysts agree was a poor one for the industry, nine oil companies ranked among the 25 most profitable industrial corporations in the land, based on the total number of dollars earned. Even by the yardstick most commonly used, return on stockholders' investment, the oil companies show only a slight depression from industry as a whole, when the high 1973 profits are included. In recent months, as the companies' profits have soared over levels set the previous year, oil executives have urged that their earnings be placed in perspective. "The profits are being compared to a poor quarter a year ago," says the typical oil executive today, who finds his firm coming under increased criticism from the public and Congress. "Our return on investment is still inadequate for the exploration and development of energy the nation so desperately needs." Security analysts generally agree that the oil industry is emerging with a bang from a period of poorer profitability several years ago. They say the performance then was caused by fuel surpluses, increased competition from the independents and a reduction in the federal depletion allowance from 27 per cent to 22 per cent in 1969. Because 1972 was a down year for the industry as a whole, earnings gains in 1973 were somewhat deceptive, analysts say. They say that profits began to improve in the first part of 1973. so percentage figures this year should be much more meaningful. . Likewise 1972 was the industry's worst year in the past 10 in terms of return on investment. This rate, a comparison of net income to shareholders' total investment, is considered important because it indicates an industry's ability to attract money needed to expand and grow. In 1972, according to figures compiled by the Federal Trade Commission, the oil industry's return on investment fell to 8.7 per cent, compared with a 10.6 per cent rate for all indutry. Returns for the 12 largest oil companies in 1972 was 10.7 per cent, the FTC s3ys, as against a 15.9 per cent for the autos and a 5.4 per cent return for the steel industry. If an entire 10-year period through 1973 is examined, FTC figures show the oil companies' return on investment at a median 11.38 per cent, compared with 11.58 per cent for all manufacturing. V.P.W. Meets In Carnarvon CARNARVON-The U.P.W. met in the Mrs. Henry Ondiu home here Thursday afternoon. Several persons who came to Carnarvon for the funeral of Reiner Janssen on Monday stayed in homes here. Mr. and Mrs. Marvin Heusenga of Clark, S.D., spent Sunday till Tuesday in the Jake R. Janssen home. Mr. and Mrs. Marvin Brotherson of Council Bluffs visited Monday. Mrs. Gene Funk of Moville spent from Sunday till Tuesday in the Roland Thorpe home. Mrs. Lucille Mohr of Woodward and Mrs. Robert Terrell of Ankeny called in the Jake R. Janssen and Mrs. Reiner Janssen homes Tuesday. Mr. and Mrs. Don Dumdei and son of Ames were visitors in the Merle Dumdei home ;here over the weekend. Analysts and economists say a major task in assessing the over-all profitability of the oil companies is knowing what measure to use. Percentage gains over previous years, return on investment, profits as a percentage of sales, earnings per share and just plain stock prices are a few of the many indicators employed. New York's First National City Bank keeps return on sales figures for various industrial groupings — and these are much more favorable to oil. For the last 10 years, the oil industry's profit margin - or income as a percentage of sales has a median of 8.3 cents to the dollar, Citibank says. This compares with all industry's 5.5 cents on the dollar. "The profit margin shows how well the industry covers its costs." says Robert Lewis. Citibank's vice president who compiles the figures. In a recent newsletter entitled "The Profit Situation." John Winger, an energy specialist for New York's Chase Manhattan Bank, utilizes yet another figure to measure profits. Winger says that for the past five years, including 1973. earnings of 24 domestically based oil companies and four foreign ones "achieved an annual growth in earnings of 12 per cent." For the past 10 years, the average increase fell far short of the growth required to provide the capital funds needed to keep pace with expansion of petroleum demand," the specialist says. Within the United States, the longer term growth of profits has been even less favorable. Winger says. "Although the group's earnings in 1973 were 19.1 per cent higher than in the year before, they were only 11.3 per cent higher than five years earlier. And the average annual growth rate for the past five years has been only 2.2 per cent. "Clearly the United States cannot possibly achieve the higher degree of petroleum self-sufficiency it so urgently needs if profits continue to grow at such slow rates." Winger says. Only if the industry maintains the 15.6 per cent rate of return attained in 1973. will it be able to generate the required capital funds, he says. And there, it seems, is the rub. The oil industry, some ar- Times Herald, Carroll, la. sdfferentthan other industries. It is capital intensive and carries heavy risks, it needs more money than other industries to build new refineries and drill new wells, proponents say. Then there's the question of whether the current high profits will continue? Security analysts and oil men are mixed. Some see a drop off as the unusual circumstances of the past year fade, Taxes increase, government policies change and new production comes on line. Others, like Chairman H.L.Haynes of Standard Oil of California, are more hopeful. Haynes hopes to "match or improve" SoCal's 15 per cent 1973 rate of return. j 4-H News DEDHAM — The Dedham Hought Riders 4-H Club met May 2 in the Dedham American Legion hall. Roll call was "Some Crops Grown on My Farm." Clarence Tunning, leader, announced the winners in the mini corn growing contest. Tim Seidl won first place and Chris Seidl, second. Demonstrations were given by Ted Koester, "Light and Plant Growth" and by Jim Koester, "Direction of Plant Growth." Lunch was served by Mrs. Clarence Tunning and Mrs. John Seidl. Drop Infant, Leap to Escape From Flames DES MOINES. Iowa (AP)—A 21-year-old Des Moines man dropped his eight month-old daughter from a second-floor apartment balcony into the arms of a neighbor Monday after flames blocked an inside stairway. Daniel Torres and his wife. Paula, 16, then leaped 20 feet to the ground, both suffering minor injuries. Torres said he was awakened by shouting and then smelled smoke. The couple got out to the balcony through a door, and Torres dropped his daughter, Christina, into the arms of Earl Ennis, 33, who lives nearby. "I was scared," Ennis said of catching the child. "I closed my hands, and there's a baby. Never again. Never again." Many of the 30 tenants in the building were able to scramble out of their apartments after the fire, which authorities believe was deliberately set, broke out about 2:15 a.m. But a few were trapped in their apartments and were ' rescued by firemen using ladders. Export Parley Set for May 22 DES MOINES, Iowa (AP) — The third annual Governor's Conference on Export Expansion will be held May 22 in Des Moines. "The conference will deal with export opportunity internationally," the Iowa Development Commission said Monday. It said guest speakers will provide information "on how Iowa companies might capitalize on newly-developed markets." 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