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Exxon breaks profit record for US firm
Exxon Mobil broke its own record for the highest-ever quarterly profit by a US company, but earnings still disappointed investors due to weaker-than-expected production.
- Reuters
- Published: 00:04 August 1, 2008
- Exxon raked in $11.68 billion, or $2.22 a share, in net quarterly profits, but that was not enough to impress the market.
- Image Credit: Bloomberg News
New York: Exxon Mobil broke its own record for the highest-ever quarterly profit by a US company, but earnings still disappointed investors due to weaker-than-expected production.
Net income in the quarter rose to $11.68 billion, or $2.22 a share, on soaring oil prices. That compares with $10.26 billion, or $1.83 a share, last year.
Exxon - the world's largest publicly traded company - previously set the high-water mark for quarterly earnings in the fourth quarter of last year, when it brought in $11.66 billion.
Revenue in the quarter rose about 40 per cent to $138.07 billion.
Still, shares dropped around 3 per cent as Exxon's results lagged behind analyst expectations.
The company posted operating earnings of $2.27 a share in the quarter, which exclude a $290 million charge related to the recent Supreme Court ruling in the Exxon Valdez case. Analysts, on average, had expected the company to earn $2.53 a share, according to Reuters Estimates.
"Exxon was hurt this quarter by sharp declines in production in most regions. The comparison versus the second quarter last year for crude oil and liquids was down in every region around the globe," said Gene Pisasale, who helps manage about $13 billion at PNC Capital Advisors.
"They are spending $25 billion a year, and they are not even breaking even now in terms of production growth," he said.
The company's oil and gas production fell 8 per cent from a year earlier, mostly due to the loss of assets taken over by Venezuela, a labour strike in Nigeria, and contracts that give host countries a larger share of production as oil prices rise.
Weak margins
Exxon both produces oil and refines it to make gasoline, and profit margins for gasoline were weak during the quarter, holding back earnings slightly.
US oil prices averaged slightly less than $125 a barrel in the quarter, nearly double prices from a year earlier. Gasoline prices only rose 25 per cent during that same period, resulting in weak profit margins for the fuel.
Exxon said earnings from its exploration and production business rose about 68 per cent to $10.01 billion. But its refining and marketing earnings fell about 54 per cent to $1.56 billion.
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