Declining demand and prices for refined fuels hurt Exxon Mobil’s second-quarter profit.
Exxon misses estimates by most since 2002 as refining sinks
- Article by: JOE CARROLL
- Bloomberg News
- August 1, 2013 - 7:52 PM
CHICAGO – Exxon Mobil Corp., the world’s biggest energy company by market value, trailed analysts’ profit estimates by the most in more than a decade as returns from its fuel-making business plunged.
Second-quarter net income was $6.86 billion, or $1.55 a share, compared with $15.9 billion, or $3.41, a year earlier, the Irving, Texas-based company said Thursday. The per-share result was 34 cents, or 18 percent, lower than the average of 21 analysts’ estimates compiled by Bloomberg, and the biggest gap since at least the fourth quarter of 2002.
Exxon’s profit from processing crude oil into fuels such as gasoline dropped 94 percent during the quarter to $396 million as demand and prices declined. The year-earlier quarter included a $7.5 billion net gain composed mostly of the sale of part of Exxon’s stake in a Japanese refining unit.
“The culprit on the earnings miss was the downstream segment,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston. “We had anticipated a big dip in the absence of last year’s divestitures, but this was much more of a drop than anyone expected.”
Alan Jeffers, an Exxon spokesman, declined to comment on analysts’ profit expectations.
Sales fell by 16 percent to $106.5 billion. Exxon declined 1.1 percent to $92.73 at the close in New York.
The company said it will reduce share repurchases during the current quarter to $3 billion, $1 billion less than the April-to-June period. Molchanov said the reduction in buybacks was a prudent measure given the volatility in crude prices.
Profit from oil and natural gas sales declined by 25 percent to $6.31 billion, according to the statement. Chemical earnings fell by 48 percent to $756 million. The company produced the equivalent of 4.074 million barrels of crude a day, a 1.9 percent decline.
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