|
Exxon 2Q net sinks 25%
|
 |
July 21, 1999: 12:17 p.m. ET
Refining, marketing lines cause income to fall 25%; lowered estimates met
|
NEW YORK (CNNfn) - Exxon Corp., stung by falling margins in its refining and marketing business even as crude oil prices rose, reported a 25-percent plunge in second quarter income Wednesday but met analysts' lowered targets.
Irving-Tex.-based Exxon, which is awaiting regulatory approval for its $80 billion buyout of Mobil Corp. (MOB), said net earnings fell to $1.2 billion, or 49 cents per diluted share.
That was down sharply from the $1.6 billion, or 65 cents a share, in the same period a year ago.
But it matched recently-lowered analysts' targets, as compiled by research tracking firm First Call Corp. On June 1, the second-quarter consensus target was for 65 cents.
Revenue rose slightly to $29.42 billion, from $29.37 billion a year earlier.
Exxon said lower profit margins in its refining businesses, a drop in natural gas prices and the negative effects of currency exchange levels hit the bottom line - despite a rebound in crude oil prices and lower operating costs.
"The real driving force -- refining and marketing, was bad -- that's a one-liner," Salomon Smith Barney analyst Paul Ting said. Refining and marketing activities are known as "downstream" operations for oil companies.
The falling earnings at Exxon, the first big oil company to report in the second quarter, could signal profit pressure at its rivals, analysts said.
"Downstream is going to be the Achilles heel for everybody," said Ting. "Exxon's situation is not unique."
Exxon said profit from downstream activities outside the United States sank a strikingly high 92 percent to $34 million, from $412 million a year ago. U.S. downstream income also fell, down 45 percent to $124 million.
Meanwhile, Exxon said gas prices outside the United States fell 16 percent from a year ago, hitting their lowest level in a decade. Analysts cited excess inventory of heating oil in Europe, while demand was low due to that continent's inability to revive its economy.
But the main upbeat sign for Exxon was a rebound in crude oil prices during the quarter. Crude surged by more than $4 per barrel from 20-year lows hit in the first three months of the year, the company said.
"With the improvement in oil prices, second quarter net income increased 18 percent from the first quarter of 1999, in contrast to the seasonal earnings decline that we usually see from the first to the second quarter of each year," said Chairman Lee Raymond in a statement.
As for "upstream" operations -- exploration and production -- the stronger crude oil prices helped. Earnings from its U.S. exploration and production rose 44 percent to $269 million.
Shares of Exxon (XON), one of 30 stocks used to calculate the Dow industrials average, fell 1-1/8 to 76-13/16 on Wednesday morning. Exxon shares have shed about 10 percent from their 52-week high of 87-1/4 set on May 4.
|
|
|
|
|
|
Exxon
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
