The nation's No. 2 steel producer, Bethlehem Steel Inc., reported a "substantial turnaround" yesterday in 1978 earnings of $225.1 million ($5.15 a share) from a loss of $448.2 million in 1977.

Sales for 1978 rose to $6.18 billion from $5.37 billion the previous year.

Bethlehem blamed its 1977 loss on bad weather, closing of facilities and the Johnstown flood.

In the fourth quarter, Bethlehem earned $74.5 million ($1.70) up from $19.2 million (43 cents) in the final 1977 quarter. Sales climbed to $1.64 billion from $1.35 billion.

Bethlehem also declared a 35-cent dividend on fourth-quarter earnings for a 40-percent increase over the 25-cent dividend declared on third-quarter earnings.

In announcing the dividend, Bethlehem said that in the future it "intends to give less emphasis to the payment of extra dividends, preferring instead to consider changes in the quarterly rate when attained results and the outlook justifies such action."

Profits of Allied Chemical Corp. dropped to $4.25 a share in 1978 from $4.85 the previous year.

Fourth quarter profit tumbled to $1.04 a share from $1.39 a year earlier.

Net income for the year fell to $120.2 million from $135.3 million, despite a rise in sales to $3.3 billion from $2.9 billion. Fourth-quarter sales rose to $852 million from $758.6 million a year earlier.

Chairman John T. Connor said he is cautiously optimistic about this year, particularly because the shutdown by various companies of some ammonia plants should reduce the depressing oversupply of fertilizer chemicals and improve prices. He also said completion of Allied's new coke batteries at Ashland, Ky., and Detroit and the improvement in the coal business should help the company.