XOM profits up 51%:
"Exxon Mobil profits rise 51 percent to $5.1 bln
By Paul Thomasch
NEW YORK, April 23 (Reuters) - Exxon Mobil Corp.(NYSE:XOM - news), the No. 1 oil company, on Monday said first-quarter earnings rose 51 percent, as it cashed in on strong crude oil and natural gas prices as well as better profits from refined fuels such as gasoline.
Exxon Mobil posted record first-quarter income, excluding merger effects, of $5.05 billion, or $1.44 a diluted share, up from $3.35 billion, or 95 cents a diluted share, in the year-earlier period. First-quarter revenues rose to $57.28 billion from $54.1 billion a year before.
Earnings for the Irving, Texas-based oil company, which last year set a record for the world's highest corporate profits, surpassed most analysts' expectations, helping its stock rise more than 3 percent on the New York Stock Exchange.
Conoco, the No. 4 U.S. oil company, also reported profits that were better than most expected. The Houston-based company said earnings rose 58 percent to $616 million, or 97 cents a share.
Calling it a blowout quarter for the oil industry, Fahnestock & Co. analyst Fadel Gheit said profits this year could even top those from a year ago.
``This is one of the best periods for the oil industry,'' he said. ``But it gets very little respect -- oil companies are the Rodney Dangerfield of the economy.''
While Exxon Mobil's stock outperformed the broader market in the first quarter, it still fell about 7 percent as investors expected red-hot commodity prices to cool down.
Prices for benchmark West Texas Intermediate crude oil, however, averaged about $28.75 a barrel in the first quarter of this year, similar to the strong $28.82 it averaged during the period a year ago. And natural gas prices averaged $6.45 per thousand cubic feet, more than 2-1/2 times the $2.46 of the period last year.
Exxon Mobil's exploration and production unit, which feels the biggest impact from oil and natural gas prices, earned $3.8 billion in the quarter, up 37 percent from a year ago.
Crude oil and liquids production rose slightly to 2.619 million barrels a day, while natural gas output slipped after the company shut down wells in Indonesia for security purposes.
THROWING IN THE TOWEL
Its downstream -- or refining, marketing and transportation business -- showed better results too, thanks to improved profit margins on fuels such as gasoline from its refineries.
``Refining is clearly a plus in this quarter,'' said Gene Nowak of ABN Amro. ``The balance of Exxon Mobil really came to the fore.''
The chemicals business, however, hurt Exxon Mobil and promises to take a bite out of results at other integrated oil companies. Rising costs for crude oil and natural gas have made feedstock for chemicals expensive, while sales of chemicals have also slowed throughout the industry alongside the faltering U.S. economy.
Overall, net income rose $1.520 million, or 44 percent, to $5 billion, the company said. Results included an after-tax gain of $40 million from asset sales required as part of Exxon's takeover of Mobil, and $90 million of merger expenses.
Completed in late 1999, the combination of Exxon and Mobil has turned out to be a better deal than expected for the oil company. Savings and benefits from the deal were initially forecast to be in the neighborhood of $2.8 billion. Exxon Mobil has steadily raised that estimate, however, and said on Monday the figure should reach more than $7 billion by 2002.
Exxon Mobil Chairman Lee Raymond called the new number ``a true step-change in efficiency,'' while adding that it could still be conservative.
``To put it simply, I fully expect to exceed these projections,'' he said.
Excluding items, Exxon Mobil's $1.44 a share beat the consensus estimate of $1.35 a share, and was at the high end of expectations ranging from $1.05 and $1.45 a share, according to Thomson Financial/First Call.
``If oil companies continue to beat earnings estimates, finally bearish investors will throw in towel and believe,'' said Fahnestock's Gheit. ``Investors basically have not given oil companies a fair shake.''
But oil companies, themselves, have showed no hesitancy in buying back their own stock with the blockbuster profits they've posted in recent quarters. Raymond said the company bought back some 17.5 million shares during the quarter.
The oil major also raised its spending in the quarter, with capital and exploration expenditures of $2.5 billion, up $292 million, or 13 percent, from the corresponding period a year ago.
It added that capital investment should rise by 15 percent to 20 percent overall this year from the roughly $11 billion is spent last year. The company expects it to rise another 10 percent in 2002.
``The financial prowess of this company is staggering,'' said Michael Young, an analyst with Gerard Klauer Mattison.
Exxon Mobil shares rose $2.83 to $88.00 on the New York Stock Exchange. Conoco's (NYSE:COCb - news) class B shares climbed 83 cents, or 2.94 percent, at $29.08." |
