Despite difficulties facing the housing and general construction industry, the chairman of Martin Marietta Corp. today predicted the company would top 1980 earnings this year because of continuing growth in the Bethesda firm's aerospace business.
Martin Marietta, with cement, gravel and other construction-related businesses, suffered steep profitability decreases in cement and aggregates divisions last year but was able to top 1979 profits because of an increase of more than 25 percent in aerospace earnings.
"We anticipate continuing outstanding results in aerospace, and we also will benefit from high investment tax credits arising from the program of aggressive capital investments for expanded capacities and greater operating efficiencies," said J. Donald Rauth, Martin Marietta's chairman.
"We are not ruling out improved profitability this year in our other, nonaerospace operations, but the extent, if it occurs, will depend upon the timing and the depth of improvement in the general economy and in the specific markets of our cement, aggregates and aluminum companies," he said.
Rauth's comments came during the company's annual stockholders meeting. The meeting was held here in a metropolitan area where Martin Marietta employs more than 1,000 people and has an annual payroll of more than $16 million.
In the only major action taken, stockholders voted today to approve a management proposal to grant the company authority to sharply increase the total number of outstanding stock shares, raising the prospect of a massive Martin Marietta stock split later this year.
The company now has 24.9 million shares outstanding and had the authority to issue 40 million shares. The decision today enables the company to issue a total of 110 million shares, with 10 million shares of that stock as preferred and the remaining 100 million designated as common stock.
"With the flexibility that now becomes available under the amended charter, it is our intent to return to the question of some larger stock distribution," Rauth said. "My estimate is that a decision likely may be expected by early summer."
Rauth also said he plans to propose an increase in the company's stock dividend later this year.
Martin Marietta's generally upbeat meeting was held two days after the company announced record first-quarter 1980 earnings and sales. The company reported sales of $717.4 million, sharply higher than the $567 million in sales for the 1980 first-quarter period. Profits rose to 39.7 million ($1.59 a share), up from 1980 first-quarter profits of $34.5 million ($1.39).
"Our gain in profitability for the year to date owes largely to the continuing strong performance of our aerospace company, but all of our operating companies made creditable showings," Rauth said. "Each of them achieved or surpassed our expectations for them in this period." Stockholders were shown a dramatic film of close-up scenes from the launch of the space shuttle this month. The company is the prime contractor for the fuel tank of the shuttle's Tital launch vehicle.
Although the Reagan administration has announced plans to reevaluate facets of the MX missile program, Martin Marietta officials said the company already has a $500 million, six-year Air Force support contract for the system and is negotiating a second contract of about $800 million.
Rauth warned, however, that 1980 results may not improve dramatically without a significant national economic recovery.
"The extent of it is going to depend on how much and how soon the total U.S. economy recovers the vigor that it began to lose last year, especially in the various construction industries," he said.