Fortune 500 Post Record Profits for 1988 : Ford Bumps Exxon for No. 2 on Magazine List
America’s largest manufacturers enjoyed their most prosperous year in recent history during 1988 as continued economic growth brought record profits and soaring sales, Fortune magazine said Tuesday in its latest ranking of the 500 biggest U.S. industrial companies.
“As the U.S. economy expanded for the sixth straight year, demand continued to surge and factories and refineries operated near capacity,” Fortune said in its April 24 issue, available on newsstands today.
Fortune 500 sales topped $2 trillion for the first time, while total profits for the group jumped 27% to a record $115 billion in 1988, the magazine stated.
Ford Bumps Exxon for No. 2
The Big Three auto makers had especially strong revenue last year, with General Motors Corp. again topping the Fortune 500 and Ford Motor Co. bumping Exxon Corp. from the No. 2 spot. Chrysler Corp. jumped to No. 7 from No. 10.
Companies involved in acquisitions also moved higher. Philip Morris Cos. took the No. 10 spot, up from 12th last year, partly because of its acquisition of Kraft Corp., ranked 31st in 1987. Eastman Kodak Co. jumped to No. 18 from No. 25 with the acquisition of Sterling Drug Inc., ranked 174 the previous year.
The magazine began publishing the elite annual directory in 1955, ranking companies in terms of annual sales. It also publishes a list later in the year of the top 500 U.S. service companies.
The top 10 after GM and Ford were: Exxon, International Business Machines Corp., General Electric Co., Mobil Corp., Chrysler, Texaco Inc., Du Pont and Philip Morris.
American Telephone & Telegraph Co., ranked eighth in the 1987 listing, was bumped from the 1988 list because most of its revenue was generated from the service sector. ITT Corp., ranked No. 45 in 1987, also fell into that category. The highest-ranking newcomer to the 500 list was Unilever U.S., owned by the British-Dutch consumer products giant Unilever, which debuted at No. 63.
Double-Digit Profit Growth
The magazine said nearly all of the 27 industrial categories contained in its list had double-digit earnings growth in 1988, led by metal companies, which showed a 100% jump, boosted by soaring copper prices and the steel industry’s successful restructuring.
Fortune attributed some of the profit increases to accounting changes requiring companies to consolidate results of their majority-owned subsidiaries.
Large oil refiners posted a 63% increase in profits, benefiting from what Fortune called “a double dose of luck; OPEC squabbling drove crude oil prices down, lowering costs, while demand strengthened, increasing prices.”
No. 31 Phillips Petroleum Co. profited most by those circumstances as earnings jumped 18-fold.
Two Groups Decline
Pennzoil Corp., ranked No. 201, was the biggest profit gainer among the 500, with a 30-fold rise in earnings. But the company owed most of that bounty to an extraordinary gain from its celebrated $3-billion lawsuit settlement with Texaco.
Hanna (M. A.) Co., a chemicals and energy concern, had the biggest increase in sales, a 122% jump.
The only two industry groups with declining profits in 1988 were apparel companies, which suffered a 3% drop, and building materials concerns, which lost 18% as housing starts declined for the second straight year in 1988.
No. 460 Maxus Energy Corp. had the biggest drop in sales, a 53% decline.
Geographically, New York is home to the greatest number of Fortune 500 companies--48, down from 51 the previous year. Chicago was again No. 2 with 22, down from 24 the year before, and Dallas was No. 3 with 15, up from 12.
The rest of the top 10 were: Houston, 13, up from 12; Pittsburgh, 12, down from 15; Cleveland, 11, down from 12; Los Angeles, Atlanta and Minneapolis tied for seventh with 10 each, and St. Louis and Stamford, Conn., tied for ninth with 9, down from 10 last year.
