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ExxonMobil disappoints with $11.7bn profit

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The Times: ExxonMobil disappoints with $11.7bn profit

May 2, 2008
Tom Bawden in New York

ExxonMobil disappointed its investors and failed to rewrite the history books yesterday when it reported profits that fell short of expectations it would set a new US quarterly record.

The world’s biggest oil group, which reported the highest quarterly profit for an American company of $11.7 billion (£5.9 billion) for the final three months of 2007, had been expected to unveil a $12 billion profit this time on the back of surging oil prices.

Instead, Exxon reported first-quarter net income of $10.9 billion, which was well ahead of the $9.28 billion it announced a year earlier, but well below consensus forecasts. Revenues for the period rose 34 per cent to $116.85 billion.

Investors registered their displeasure by pushing the group’s shares 2.5 per cent lower to $90.77 in early trading.

US oil futures surpassed $100 a barrel for the first time in January and averaged $97.82 for the quarter, a 68percent rise on the year-earlier period.

The rising price of oil pushed up profits at Exxon’s oil and gas production unit by 45 per cent to $8.79 billion.

However, the downside for Exxon was that the group was not able to pass on all of the cost increases of its refining unit, which recorded a 39 per cent drop in first-quarter profit to $1.17 billion. Profits at its chemicals division fell 17 per cent as the rising oil price hit margins.

Exxon’s year-on-year first-quarter profit increase of 17 per cent was less than that reported by key rivals Royal Dutch Shell and BP, which recorded gains of 25 per cent and 63 per cent respectively this week.

The disappointing results will put further pressure on Exxon’s senior management to address concerns raised by shareholders about the direction of the group.

The company’s founding Rockefeller family said this week that Exxon was falling behind competitors such as BP, Shell, Conoco and Chevron in key areas of renewable energy such as wind and solar power.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3857604.ece

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