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Adam Ford
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Exxon Mobile "only" managed to earn $10.89 billion in the fist quarter.
http://news.yahoo.com/s/nm/20080501/bs_nm/exxon_dc_10
NEW YORK (Reuters) - Exxon Mobil Corp (XOM.N) posted a $10.89 billion first-quarter profit on Thursday, but still managed to disappoint investors as weak production volumes and low refining margins blunted the impact of record-high crude prices.
Earnings rose 17 percent year over year, and were the second-highest in U.S. history, but still fell short of Wall Street expectations, and its shares dropped 3.6 percent.
Exxon's near-record profits brought sharpened scrutiny from politicians and consumer groups, who are upset about sky-high gasoline prices at the pump.
Benchmark U.S. oil prices averaged a record of nearly $98 a barrel during the quarter, up about 70 percent from a year earlier.
Exxon posted record earnings of $40.6 billion in 2007, with revenue higher than the gross domestic product of Turkey, the world's 17th-largest economy. If oil prices stay above or around $100 for the remainder of 2008, the company could beat that mark.
A steep drop in profit margins for gasoline cut into Exxon's earnings as the company, like other refiners, struggled to pass on higher crude costs to customers. First-quarter gasoline prices rose 33 percent year over year in the United States -- less than half crude's rise.
Exxon's oil and gas production also fell 5.6 percent in the quarter.
Chris MacDonald, portfolio manager at WHG Funds, said the production decline was "kind of shocking."
"It makes the future seem kind of dire, because this quarter they really got bailed out by high oil prices ... It kind of shows that you're at the limit of big new finds."
The company has been criticized by analysts and investors for laying back on capital spending while going full bore on share buybacks.
Exxon spent $31.8 billion to buy back shares in 2007, while shelling out $20.9 billion for capital expenditures. In 2008, the company expects to increase its capital spending to around $25 billion.
"It seems that they are more of a share buyback machine that also happens to produce energy," MacDonald said.
Earlier this week, European oil majors BP Plc (BP.L) and Royal Dutch Shell Plc (RDSa.L) posted big first-quarter earnings gains as the crude oil surge was an even bigger boon for them than expected. Both companies had flat production during the quarter.
REVENUE OF $117 BILLION
The world's largest publicly traded company earned $2.03 a share in the first quarter, up from net income of $9.28 billion, or $1.62 a share, in the same period last year.
But analysts, on average, expected profit of $2.11, according to Reuters Estimates.
Revenue rose to $116.85 billion from $87.22 billion. The company also had a whopping 49 percent effective income tax rate in the quarter, up from 44 percent last year, which also weighed on earnings.
Earnings at its exploration and production segment increased 45 percent to $8.79 billion, while refining profits dropped 39 percent to $1.17 billion.
The company said its production shortfall resulted in part from production-sharing contracts that give host countries a larger share of oil and gas produced as commodity prices rise. The decline of older fields and the loss of operations that were nationalized by Venezuela last year also hurt.
Exxon reached a deal with a Nigerian oil union on Thursday after an eight-day old strike had shut down virtually all of the 800,000 barrels per day of production in the country, which could hit the company's second-quarter output figures.
"The question is going to come, and you always have to ask it every year: Are they seeing any acceleration in mature field declines? Because slowly the majors are beginning to see this to some degree," said James Halloran, energy analyst with National City Private Client Group in Cleveland.
Halloran is concerned because very little of the volume shortfall appears to be one-time items such as maintenance.
Earnings at Exxon's chemicals unit dropped 17 percent to $1.03 billion.
'DEVASTATING CHOICES'
"There is something seriously wrong with our economy when Exxon's record $11 billion in quarterly profits are seen as a disappointment by Wall Street," Democratic presidential hopeful, New York Sen. Hillary Clinton, said in a statement.
"But on Main Street, middle-class families are facing devastating choices every day between buying groceries and filling up their gas tanks to get to work."
Exxon shares closed down $3.37 at $89.70 on the New York Stock Exchange.
The stock is off more than 4 percent this year, underperforming the Chicago Board Options Exchange's oil index (.OIX), which is nearly flat over the same period. |
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Thu May 01, 2008 11:42 pm |
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Richard
F L I N T O I D
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| Bend over guys and grab your ankles. |
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Fri May 02, 2008 10:20 am |
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Dave Starr
F L I N T O I D
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"There is something seriously wrong with our economy when Exxon's record $11 billion in quarterly profits are seen as a disappointment by Wall Street," Democratic presidential hopeful, New York Sen. Hillary Clinton, said in a statement.
It's not just Exxon. Any company whose earnings do not meet Wall Street's expectations is seen as "disappointing". A few years ago, a company - now I can't remember who - posted the highest earnings in their history. Their stock dropped because the "experts" expected more. |
_________________
I used to care, but I take a pill for that now.
Pushing buttons sure can be fun.
When a lion wants to go somewhere, he doesn’t worry about how many hyenas are in the way.
Paddle faster, I hear banjos. |
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Fri May 02, 2008 11:06 am |
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Adam Ford
F L I N T O I D
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I am firmly capitalist but for some reason the irony of the article caught my eyes.
On a percentage basis there are companies that do make more money as a percentage of sales. For as high as oil prices are it seems like Exxon should have a 50% profit margin. |
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Fri May 02, 2008 12:06 pm |
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Ted Jankowski
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quote:
Adam Ford schreef:
I am firmly capitalist but for some reason the irony of the article caught my eyes.
On a percentage basis there are companies that do make more money as a percentage of sales. For as high as oil prices are it seems like Exxon should have a 50% profit margin.
Adam, MOst businesses work off 10 - 30 percent profit (not gross).
I would love to have a 50 percent mark up where I work. We sell most tires at wholesale. Yet people still whine that they are being ripped off. Yet they will go to sears or Walmart where the products cost has been dropped because it's made in china and the profit per item is 100 200 percent on clothes and tools. When sears has a 50 Percent off sale they still make money. However, their overhead is a killer. |
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Fri May 02, 2008 12:48 pm |
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Ted Jankowski
F L I N T O I D
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quote:
Adam Ford schreef:
I am firmly capitalist but for some reason the irony of the article caught my eyes.
On a percentage basis there are companies that do make more money as a percentage of sales. For as high as oil prices are it seems like Exxon should have a 50% profit margin.
Adam, MOst businesses work off 10 - 30 percent profit (not gross).
I would love to have a 50 percent mark up where I work. We sell most tires at wholesale. Yet people still whine that they are being ripped off. Yet they will go to sears or Walmart where the products cost has been dropped because it's made in china and the profit per item is 100 200 percent on clothes and tools. When sears has a 50 Percent off sale they still make money. However, their overhead is a killer. |
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Fri May 02, 2008 12:48 pm |
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FlintConservative
F L I N T O I D
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quote:
Adam Ford schreef:
The company also had a whopping 49 percent effective income tax rate in the quarter, up from 44 percent last year, which also weighed on earnings.
What? A corporation paying tax? (Of course...it's not enough!) |
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Fri May 02, 2008 5:15 pm |
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