Exxon, Mobil Earnings Decline in 4th Quarter; Weak Oil Market Cited

Two oil giants, Exxon Corp. and Mobil Corp., reported Thursday that their profits fell in the fourth quarter as tumbling prices for petroleum products cut into earnings.

However, Exxon, the world’s biggest industrial company, said its net income for the year rose more than 10%. In the final three months of 1984, Exxon’s profits slid 11.9% from a year earlier.

Mobil, the No. 3 oil company in the United States, said its earnings dropped 36% for the quarter and 15.5% for the year.

Meanwhile, Standard Oil Co. (Ohio) said its profit dipped 1.3% for the year after falling 10.5% in the fourth quarter, reflecting refining setbacks and widening losses from its mining business.

In a separate announcement, Exxon said that it had agreed to sell its office systems business outside the United States to Ing. C. Olivetti & C. S.p.A. and that it was continuing negotiations for the sale of its U.S. office systems business. Terms of the sale to the Italian company were not disclosed.

Refinery Write-Downs

Both Exxon and Mobil had large write-downs for refinery closures in the fourth quarter, and both reported steep drops in results from refining petroleum products such as gasoline and heating oil.

“Earnings in 1984 were depressed by price weakness for petroleum products in key markets, reflecting excess refining capacity, the oversupply and price weakness of crude oil and the continued strengthening of the U.S. dollar versus most major foreign currencies,” Mobil said in its earnings report.

As an example of the problems facing oil companies, the securities firm of First Boston Corp. estimated in a report last week that a Gulf Coast refiner paying the official price of $29 a barrel for Arabian Light oil was getting only $24.84 a barrel on the open market for the products produced from the oil.

Despite the fourth-quarter retreat, Exxon said gains from earlier in the year lifted its profit for all of 1984 by 11%.

In addition to disappointing results from refining, Mobil also reported interest expenses of $102 million in the fourth quarter and $174 million for the full year in connection with its $5.7-billion purchase of Superior Oil Co.

Exxon Earns $5.5 Billion

Exxon’s earnings in the fourth quarter fell to $1.4 billion from $1.6 billion a year earlier. Revenue dipped 1.1% to $24.5 billion from $24.8 billion.

For all of 1984, earnings rose to $5.5 billion from $4.98 billion in 1983. Revenue jumped to $97.3 billion from $94.7 billion a year earlier--below the record $108.1 billion of 1981.

Mobil said earnings in the fourth quarter fell to $286 million from $447 million a year earlier. Revenue slipped 2.8% to $15.6 billion from $16.1 billion.

For 1984, profit fell to $1.3 billion from $1.5 billion in 1983. Revenues edged up 2.8% to $60.6 billion from $59 billion.

Clifton C. Garvin Jr., Exxon’s chairman, said growth in demand for petroleum and chemicals was spurred in the first half of 1984 by a strong economic recovery. But he added that a slowdown in the second half and warmer-than-usual weather late in 1984 “continued surplus supply and excess capacity in the petroleum industry.”

He said the refining and marketing of petroleum products, such as gasoline, “suffered significantly from downward pressure on product prices in most major markets.”

Exxon said its profits from refining and marketing fell 75.4% in the fourth quarter and were down 68.8% for the entire year, sliding to $353 million from $1.1 billion.

It also reported a $121-million one-time charge against earnings to reflect its previously announced decision to discontinue its refinery at Aruba, its decision to withdraw from certain office systems operations and the disposition of two large ships from its fleet of oil tankers. The refinery closing represented about half that amount and the office systems about 25%.

“It’s obvious that refining and marketing still does not do well. I think that’s the real killer,” said Rosario Ilacqua, an analyst at the securities firm of L. F. Rothschild, Unterberg, Towbin.

Ilacqua said a substantial portion of Exxon’s profit was related to a reduction in its oil inventories, in part related to the planned refinery shutdown. Profits from the sale of relatively low-cost petroleum inventories rose to $444 million in the fourth quarter from $331 million a year earlier. For the year, those profits were $589 million, against $565 million in 1983.

Mobil said it had a $77-million refining and marketing loss in the fourth quarter, compared to a $174-million profit a year earlier. For the full year, refinery profits plunged to $26 million from $404 million.

Mobil reported a one-time charge of $110 million for the previously announced closing of its Wilhemshaven refinery in West Germany.

In Cleveland, Sohio said fourth-quarter profit fell to $290 million from $324 million in 1983. Revenue edged up to $3.21 billion from $3.16 billion.

For the year, profit edged down to $1.49 billion from $1.51 billion. Revenue rose 2.4% to $12.3 billion from $12 billion.