Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Exxon profits up 38%, but miss estimates

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Exxon Mobil Corp. said Thursday that earnings in the first quarter rose 38% from a year earlier as oil prices rebounded. But profits fell short of Wall Street's expectations due partly to higher health care costs.

The world's largest publicly traded energy company said it earned $6.3 billion, or $1.33 per share, in the first three months of 2010. That's up from $3.5 billion, or 92 cents per share, in the same period last year.

It was the first time Exxon reported a quarterly increase in earnings since the second quarter of 2008, when it posted a record $11.7 billion profit. But Thursday's results were below Wall Street forecasts. Analysts had anticipated earnings of $1.41 per share, according to a consensus compiled by Thomson Reuters.

Shares of Exxon (XOM, Fortune 500) recovered from early declines, rising 0.5% to $69.55 in morning trading.

"The improvement from the two prior periods was mainly due to higher oil prices," said Fadel Gheit, an analyst who covers Exxon at Oppenheimer Equity Research. "A loss in U.S. refining, higher health care costs and income tax rate were the main reasons earnings were below expectations."

Exxon said it took a charge of $200 million, or 4 cents a share, related to the health care reform bill President Obama signed into law in March. Earnings were also impacted by the absence of favorable 2009 tax items, the company said.

Rex Tillerson, Exxon's chief executive, said in a statement that higher oil prices and strength in the company's chemicals business helped boost earnings. But he acknowledged that refining margins "remained weak" in the quarter.

Exxon and other companies that convert crude oil into refined products such as gasoline and diesel have been squeezed as demand for fuels remains soft and oil prices have trended higher.

The company said earnings in its global refining business fell to $37 million from $1.1 billion a year earlier, due mostly to lower margins. The company suffered a $60 million loss in its U.S. refining operations.

But weakness in refining was offset by stronger earnings from Exxon's oil production and exploration activities, which benefited from higher oil prices.

In the first quarter, oil prices averaged nearly $78 a barrel, compared with an average of about $43 a barrel in the same period of 2009.

The rebound in oil prices and gradually improving economy has helped boost profits across the energy sector. ConocoPhilips (COP, Fortune 500) posted a $2.1 billion quarterly profit that was more than double last year's take. Royal Dutch Shell (RDS.A) said Wednesday that profit rose 48% to $4.9 billion in the first quarter.

Exxon said production rose by 4.5% in the quarter. The company increased capital and exploration spending by 19% to $6.9 billion.

"Our solid financial position enabled ongoing investment at record levels through the business cycle," said Tillerson.

Earnings from Exxon's chemicals business, the smallest of its three divisions, jumped to $1.2 billion from $350 million a year ago.

Sales in the quarter were $90.2 billion, versus a forecasted $96.4 billion in revenue.

Cash flow from operations and asset sales jumped to $13.1 billion in the quarter from $9.1 billion.

Meanwhile, Exxon said it received clearance from the U.S. and Dutch authorities to proceed with its acquisition of natural gas giant XTO Energy (XTO, Fortune 500). The deal is expected to close by the end of the second quarter.

David Rosenthal, Exxon's vice president of investor relations, declined to comment on the status of the deal with XTO in a conference call with analysts.  To top of page

Search for Jobs

Index Last Change % Change
Dow 17,651.26 -99.65 -0.56%
Nasdaq 4,725.64 -37.59 -0.79%
S&P 500 2,051.12 -12.25 -0.59%
Treasuries 1.78 -0.02 -0.89%
Data as of 7:57am ET
Company Price Change % Change
Bank of America Corp... 14.13 -0.23 -1.60%
Freeport-McMoRan Inc... 11.80 -0.21 -1.75%
Apple Inc 93.62 0.57 0.61%
Micron Technology In... 10.00 -0.36 -3.47%
General Electric Co 30.07 -0.56 -1.83%
Data as of May 4
Sponsors

Sections

Tesla CEO Elon Musk had said previously that the automaker would become "cash-flow positive" this year. But in a letter to shareholders Wednesday, Musk signaled that won't be the case after all. More

Iris Hu's Taiwanese immigrants who wanted her to become a doctor or lawyer. Instead she found her own path through art. More

Oakland-based tech startup Clef hosts dinners for the local community in a bid to resist gentrification and unite all types of industries that make up the city. More

Visa says new software will allow consumers to check out with chip cards as fast as swiping a card with magnetic strip. More