THE TIMES 100 : THE BEST PERFORMING COMPANIES IN CALIFORNIA : THE BOTTOM LINE : Atop the Bottom Line : Chevron Returns as Most Profitable Firm, Helped by Decline in Price of Oil
The volatile oil situation didn’t cramp Chevron’s style in 1988.
The giant San Francisco-based energy concern, which dwarfs most other oil companies, topped The Times 100 list of 25 companies with the biggest bottom lines in 1988, reclaiming the lead from its much smaller rival, Atlantic Richfield.
Like other major oil companies, Chevron reaped the benefits of having extensive refining and gasoline marketing, or “downstream,” operations that thrive on cheap crude oil.
“Downstream had probably its best year ever,” said Kenneth T. Derr, who on Jan. 1 became chairman and chief executive of Chevron.
Chevron’s profit of $1.768 billion on revenue of $25.2 billion, down slightly from 1987, reflected high margins in its gasoline business, which benefited during the last three quarters of 1988 from declining crude oil prices and strong demand from drivers. In addition, Derr said, the company had an excellent year in the chemical business, where supply and demand finally came into balance after “years of struggle” and oversupply.
Truth be told, Los Angeles-based Arco technically held the lead spot only temporarily last year. Soon after The Times 100 list was published, Chevron restated its earnings to allow for accounting changes. The restated figure of $1.25 billion for 1987, up from the $1.007 billion initially reported, would have topped Arco’s $1.224 billion.
The same factors that drove Chevron’s figures higher also helped Arco, noted M. Craig Schwerdt, an analyst with Seidler Amdec Securities in Los Angeles. So far this year, the recent oil spill in Alaska and other short-term factors have caused spectacular run-ups in crude prices, but, Schwerdt said, “refining margins have kept up.” So “integrated companies” such as Chevron and Arco, he said, “are doing very well indeed right at the present.”
A third oil company, Occidental Petroleum, made the list at No. 17, up two spots from last year.
Rockwell, a big defense and aerospace company with headquarters in El Segundo, made the list in fifth place. The company was formerly based in Pittsburgh.
California’s major banks, unchained by writeoffs on foreign loans, staged a powerful comeback in 1988. Security Pacific Corp., in seventh place, is one of the big commercial banks that roared back to life in 1988 after hard times in 1987. And formerly troubled BankAmerica Corp. surged back into the black in 1988 after three years of heavy losses, making the list at No. 9. Wells Fargo came in No. 11.
High-tech firms, including old-timers such as Hewlett-Packard and Intel, also turned in an improved showing, reflecting their industry’s fast growth in 1988.
Hewlett-Packard, which moved up two places to No. 4, enjoyed strong growth and acceptance of its basic backbone products--computer systems used in offices and laboratories.
Semiconductor maker Intel, which placed 23rd last year, moved to No. 12. Its proprietary chips, used in many of the nation’s leading personal computers, contributed to the overall gains in technology at other companies as well.
Amdahl, a maker of big mainframe computers that compete with IBM’s, made the list because of a strong recovery in profit. The company benefited from confusion among customers over new product lines and production delays at IBM.
And Apple Computer moved ahead three spots to No. 13, reaping the rewards of greater acceptance among offices and school campuses of its user-friendly Macintosh computer.
Signs of belt-tightening are surfacing at Teledyne, a conglomerate that makes a range of products from shower heads to defense electronics. The Los Angeles-based company sank to No. 14 from ninth place last year in profit and reported a shrinking need for workers.
ABSOLUTE PROFITS
Ranks companies by profits from continuing operations.
‘88 income Rank Company ($ millions) 1 Chevron 1,768 2 Atlantic Richfield 1,583 3 Pacific Telesis Group 1,188 4 Hewlett-Packard 816 5 Rockwell Intl. 812 6 SCEcorp** 809 7 Security Pacific 639 8 Lockheed 624 9 BankAmerica 547 10 Walt Disney 522 11 Wells Fargo 513 12 Intel 453 13 Apple Computer 400 14 Teledyne 392 15 Transamerica 346 16 Times Mirror 332 17 Occidental Petroleum 313 18 Syntex 297 19 Great Western Financial 248 20 Firemans Fund 235 21 Pacific Enterprises 222 22 Amdahl 214 23 First Executive 205 24 H.F. Ahmanson** 203 25 San Diego Gas & Electric 189
**See company notes, page 29.
IN THE RED
Ranks companies by loss from continuing operations.
‘88 loss Rank Company ($ millions) 1 Henley Group** (222) 2 Cooper Cos. (152) 3 New World Entertain. (105) 4 Gibraltar Financial** (101) 5 MGM/UA Commun. (49) 6 Wickes* (46) 7 TeleVideo Systems (40) 8 Northrop (31) 9 Central Bank (27) 10 Avantek (25) 11 Beverly Enterprises (24) 12 Vons Cos.** (24) 13 Transcon (24) 14 Tandon (20) 15 Micropolis (19) 16 Scientific Micro Systems (17) 17 National Semiconductor* (16) 18 Thortec International (16) 19 Titan (14) 20 International Rectifier (12) 21 General Automation (12) 22 Kaypro (11) 23 Dataproducts (11) 24 Ducommun* (10) 25 Homestead Financial (9)
*See exceptions, page 38. **See company notes, page 29. PROFIT MARGINS
Ranks profits from continuing operations as a percent of sales.
% ’88 Rank Company return 1 Franklin Resources 32.7 2 Autodesk 27.9 3 Intl. Lease Finance 27.7 4 Adobe Systems Inc. 25.3 5 Syntex 23.3 6 Alza 23.0 7 Argonaut Group 21.8 8 Community Psych. 20.4 9 Carolco Pictures Inc. 19.9 10 Cadence Design Sys. 19.5 11 WD-40 Co. 19.4 12 Homestake Mining 19.2 13 Software Publishing 18.5 14 Digital Microwave 18.1 15 Armor All Products* 17.3 16 Dionex 16.6 17 Acuson 16.3 18 Aaron Spelling Prod. 16.2 19 Wesco Financial 16.0 20 Intel 15.8 21 Chips & Technologies 15.6 22 Ashton-Tate 15.5 23 Xicor 15.5 24 Walt Disney 15.2 25 Cypress Semicond. 14.9
*See exceptions, page 38.
