The Bethesda-based Martin Marietta Corp., one of the nation's major deversified aerospace firms, will have another profitable year in 1980 despite projected downturns in four of its five divisions, company chairman J. Donald Rauth told stockholders today.
The national recession may hurt the company's cement, construction aggregate, chemical and aluminum divisions because of slowdowns in housing, construction and business in general, Rauth said.
He added after the hour-long stockholder's meeting that -- while those division will "feel some recessionary factors at work" -- the aerospace division, which last year accounted for about 40 percent of the company's sales and 20 percent of its earnings, "will maintain the company's momentum and sales. Earnings will be up and offset any downturns. We will be competitive. We will perform against any industry average."
Shareholders today approved a proposal to double the authorized number of series preferred stock from five million to 10 million. No series preferred is outstanding now, and the company said it doesn't have immediate plans to issue any of the shares.
Rauth told the stockholders that, although "Martin Marietta has had a good start" as far as first-quarter earnings, "it is possible to read too much" into those earnings.
"They aren't always accurate indicators of what will follow. This is because two of our businesses, cement and aggregate, are seasonal and the real strengths or weaknesses and their markets cannot be fully determined until winter has gone and weather conditions are favorable for all kinds of construction activity, which is, of course, their life blood," Rauth said.
The first-quarter results for concrete and aggregates were down compared to last year, Rauth said. Those earnings were released last week.
"It's impossible right now to be certain how much is seasonal and how much is recessionary," the company's chairman said.
Rauth added later, "In economic recession that is developing, our aluminum, chemicals, concrete and aggregate business eventually will be affected in some varying times. These four Martin Marietta companies inevitably will tend to follow the important trendlines in the national economy."
The aerospace division reacts to different economic forces and cycles, Rauth said, such as "national and international security considerations."
For the first quarter, earnings were $34.5 million ($1.39 a share) compared to $32.8 million ($1.29). For the year, the company earned $178 million, of which the aerospace division contributed $63.2 million. Aluminum was the largest contributor with $95 million in earnings, according to the company's annual report.
The corporation's cash position is "comforting" and the corporation has excellent capacity to incur and support debt in substantial amounts should that become advisable in the pursuit of our objection," Rauth said.
The company already has started $406 million in capital expansion for this year to help increase productivity, Rauth told the stockholders. That includes investments in the company's aerospace divisions in Orlando, Baltimore and Denver and new cement facilities near Davenport, Iowa, and in Utah.
While Rauth said that stockholder dividends rose six times in the last 33 months, two stockholders complained they should be earning more since the company is so profitable.
Rauth replied that the dividends have never been lowered as has been done in one-third of the nation's 200 largest companies in the last few year, and that Martin Marietta's board has decided to spend the company's earnings in more profitable ways.