General Electric Co.'s second-quarter net income rose 7 percent to $465 million ($2.05 a share) from $436 million ($1.92) a year ago in spite of a 5 percent drop in sales to $6.63 billion from $6.9 billion, the giant manufacturer reported yesterday.

First-half profits rose 6 percent to $842 million ($3.71) from $795 million ($3.49) although sales fell to $12.66 billion from $13.04 billion.

Chairman John F. Welch Jr. said GE's operating margins improved in the second quarter to 9 1/2 percent from 9.2 percent in the first quarter, mainly on sales gains in the company's high-technology and service businesses.

He said aerospace, aircraft engines, medical systems, information services and General Electric Credit had a combined gain of 66 percent in earnings over the second quarter last year, more than offsetting a 10 percent drop in earnings from appliances, lighting equipment and engineered materials, all of which were hit fairly hard by the recession. General Electric Credit earnings of $47 million were up 34 percent.

Chemical New York Corp., parent of the nation's sixth-largest bank, yesterday reported a 9.7 percent increase in its second-quarter profits.

The holding company of Chemical Bank said net income after securities transactions was $57.6 million, up from $52.5 million. Reflecting conversions of convertible stock, notes and debentures, plus a $200 million issue of preferred stock, quarterly earnings per share declined to $2.09 from $2.16.

Chemical New York's first-half final net was $119.3 million ($4.46 a share), up 6 percent from $112.4 million ($4.63) in the year-earlier period.

Chemical said its loan loss provision in the first half was $40.3 million and net charge-offs were $29.5 million. A year ago, the loan loss provision was $48.6 million and charge-offs were $29.7 million.

General Mills Inc. yesterday reported improved earnings for the 20th consecutive year and said its return on shareholders' equity reached a record 19.1 percent, up from 18.4 percent a year earlier.

Profits in its fiscal year ended May 30 were $225.5 million ($4.46 a share) on sales of $5.312 billion, up from $196.6 million ($3.90) the previous year on sales of $4.852 billion. The earnings gain was 14.7 percent, and the sales gain was 9 1/2 percent.