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Thursday, October 30, 2008
Exxon Mobil Earnings Rise 58%, Setting Record
Dunstan Prial
FOXBusiness
Bucking a downward trend among U.S. corporate titans as the country slides toward recession, oil giant Exxon Mobil (XOM) on Thursday reported the largest quarterly profit ever by an American company.
The $14.8 billion earned during the third-quarter broke the Irving, Texas-based company’s own record last quarter of $11.7 billion.
Exxon said net income jumped nearly 58% to $2.86 a share in the three month period from July through September. That compares with $9.41 billion, or $1.70 a share, during the same period a year ago.
“On our estimates, the beat was across the board, as every business segment posted higher than expected earnings,” JPMorganChase analyst Michael LaMotte wrote in a note to investors.
Revenue rose 35% to $137.7 billion.
On average, analysts expected the company to earn $2.39 per share in the latest quarter on revenue of $131.4 billion.
Profits soared while crude oil prices hit record highs in the summer, pushing gasoline prices above $4 a gallon in most areas of the U.S.
ExxonMobil’s fourth-quarter profits are expected to fall in tandem with the coinciding decline in the price of oil. A barrel of crude oil was selling for about $65 on Thursday, down from a high of $147 in July.
But record earnings translated to record taxes.
ExxonMobil, which operates within a 43.3% tax rate, paid $11.3 billion in income taxes, $9.3 billion in sales taxes and $11.85 billion in other taxes. That comes to $32.51 billion in taxes during the current quarter.
Exxon Mobil's results got a boost of $1.6 billion in the most-recent quarter from the sale of a natural gas transportation business in Germany. It also took a special, after-tax charge of $170 million related to a damages award stemming from the 1989 Exxon Valdez oil spill.
As expected, Exxon Mobil posted massive earnings at its exploration and production, or upstream, arm, where net income rose 48 percent to $9.4 billion.
Separately, Europe's biggest oil company, Royal Dutch Shell (RDS.A), posted a 22% increase in third-quarter profit, reaping the benefits of a record surge in crude oil prices this summer.
Shell’s net income rose to $8.45 billion, or $1.37 a share, from $6.92 billion, or $1.10, during the same three-month period a year ago.
Profits from record crude oil prices offset production cuts in Nigeria and the Gulf of Mexico, the company said in a statement.
Shell said it’s moving ahead with the first expansion phase of its Athabasca Canadian oil-sands project, but putting further investment there on hold because of high local construction costs.
“We had in mind to decide on the second expansion in 2009,'' Chief Executive Officer Jeroen Van Der Veer said during a conference call. “But at this moment, if you look at the combination of inflated labor costs and raw material prices in the form of equipment, we felt that we had better delay that.”
Excluding one-time items, third-quarter profit was $8.04 billion, with gains of $800 million in additional fair-value adjustments. Analysts had estimated profits at $7.22 billion.
Record-high oil prices boosted profits during the third quarter, but Shell was hampered by militant attacks in Nigeria, which forced Shell to reduce production -- and Hurricanes Gustav and Ike struck the Gulf of Mexico, forcing the shutdown of drilling platforms.
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Sure, we know some of you are saying the term "marriage penalty" is redundant. In fact, of all the costs associated with getting married (have you seen the cost of a wedding cake lately?), the marriage penalty can be the worst.
Here's how it works: Mr. and Mrs. Right walk down the aisle in wedded bliss and suddenly they¿re a two-income household. If both make roughly the same amount of money, they can be pushed into a higher tax bracket. That's bad, since the higher the bracket, the higher the tax. So, if both were single, they'd end up writing two smaller checks to the tax man that, if combined, would add up to less than the giant check they write in a state of wedded bliss.
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