ECONOMY: Big local firms report high profits

Some hints of a return to economic normalcy are buried in the latest financial reports of the Richmond region's corporate giants.

As in the rest of the country, the area's big companies have reported big gains in profits.

Of the companies in the Standard & Poor's 500 index that have reported first-quarter profits, three-quarters reported improved results.

"First-quarter profits have been a complete blowout," said Kent Engelke, chief economic strategist at Capitol Securities Management in Richmond.

But Richmond-area companies are reporting other matters besides better earnings.

Sales are up for key supplies that factories need to boost production. On the consumer front, people may be spending more.

But businesses and consumers still are careful about debt.

"The economic recovery is expanding into more industries," said Christine Chmura, president of Chmura Economics and Analytics.

One early signal of the economy can be teased from Richmond-based MeadWestvaco's latest report.

The packaging giant's shipments of two key paper products used in packaging rose 3 percent and 5 percent. Economists watch packaging trends, because before other companies start shipping goods, they need to have packaging on hand.

Another signal: Despite a grim winter and spring at Massey Energy, the coal company reported shipments of metallurgical coal -- the grades used to make steel, that basic building block of machinery, cars and commercial construction -- rose 33 percent.

NewMarket used nearly $44 million of cash on hand to buy Polartech, maker of metalworking additives.

Owens & Minor reported IOUs from other companies are down. Its wait to get paid after a sale transaction eased to 20.5 days in the quarter from 23.6 days in the first quarter a year ago.

Consumers did better, too.

Over the three months of the quarter, Capital One Financial, based in McLean but with its major operations in the Richmond area, noted a 0.48 percentage point decline in the portion of its domestic credit-card balances that are late, to reach 5.3 percent.

Consumers still are cautious about using credit cards -- balances outstanding in Capital One's domestic credit-card business declined $4.1 billion in the quarter, to $56.2 billion.

On the other hand, Union First Market Bankshares said its nonperforming assets -- the loans on which it is not receiving payments as scheduled -- rose by $24 million during the three months, to reach $68.9 million.

"Credit costs continue to impact us as the economy begins what we feel will be a protracted recovery," said G. William Beale, Union First Market Bankshares' chief executive officer.

In another signal of uncertainty, Dominion Resources' Dominion Virginia Power subsidiary reported that electricity sales to factories and industries declined nearly 6 percent. Residential customers keeping the heat up boosted power sales during the quarter.

"I still believe that much of this [economic growth] has been purchased with massive monetary stimulus and significant federal stimulus," said David A. Brat, chairman of the economics department at Randolph-Macon College in Ashland.

"My concern remains that when we unravel that stimulus, we may find and experience some unintended consequences."

Still, consumers may be feeling a bit better generally.

Signs of that came from Richmond-area firms involved in one sector hit hard by the slump -- the car and truck business.

"Based upon improvements in our sales and profitability and the increasing stability in the credit markets, we have decided to resume store growth," CarMax President and CEO Tom Folliard said.

CarMax saw a 13 percent increase in the number of vehicles it sold during the three months that ended Feb. 28, the last quarter of its fiscal year.

In a more subtle sign of how consumers are feeling, CarMax noted that revenue from vehicle sales was up 23 percent -- a faster rise that suggests consumers are, on average, willing to pay for more expensive cars and trucks than they had been.

That echoes a signal from Altria Group, the nation's No. 1 tobacco company.

Its Marlboro brand cigarettes' market share jumped 1 percentage point during the quarter, to capture a record 42.7 percent of the U.S. market, while its discount brands declined.

Altria's premium Copenhagen snuff saw its market share jump 0.9 percentage points to reach 25.6 percent.

Cigarettes, unlike cars, are among the most recession-proof products around.

But even in the sector of the economy hit hardest by the slump -- housing -- one Richmond-area firm saw signs of improvement.

Genworth Financial Chairman and CEO Michael D. Fraizer said the company's hard-hit mortgage-insurance business is on the road back to profitability, as high-priority efforts to help homeowners restructure deals to avoid foreclosure are paying off.

Fraizer said he sees signs that demand for coverage is on the rise, as the housing market slowly improves.

"We would like to write more new business," he said.

Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.