Arco Net Income Slumps 22.4% During 1st Quarter
Atlantic Richfield Co. shareholders rejected a proposal that the company prepare a “report card” of its environmental record--but not before the measure won a surprisingly strong 14.2% share of votes at Arco’s annual meeting in Los Angeles on Monday.
The vote was another reminder that the environment has taken center stage for the oil industry in the wake of recent oil spills and heightened consciousness about drilling in offshore areas and the Arctic.
“It shows management that there is among the shareholders a serious question about whether the company is fulfilling its promises about its policies, and we feel very good about that,” said Albert G. Cohen, who introduced the measure on behalf of several church groups that own about 13,000 shares.
Meanwhile, Arco reported that net income in the first quarter was down 22.4% to $547 million, compared to $704 million a year ago.
Excluding special gains and one-time items, Arco’s earnings were up 10% to $457 million from $415 million last year, due in part to higher crude oil and refined product prices.
Revenue for the quarter was $4.21 billion, compared to $3.96 billion a year ago.
After the meeting at the Sheraton Grande Hotel in downtown Los Angeles, Arco Chairman Lodwrick M. Cook said the report card vote shows that most shareholders have confidence in management’s handling of environmental issues. “I think the significance of the vote is that most of the shareholders expect management to deal with this and handle the environmental matters that affect the company,” he said.
Underscoring the environmental theme, the company had a video presentation and exhibit on the success of its EC-1 lower-emissions gasoline, which was introduced for older cars last summer. The product now accounts for about 34% of the regular gasoline market in Southern California, according to Arco officials.
Arco also detailed plans to invest $835 million over the next five years at its Cherry Point, Wash., refinery and $305 million over the same period at its Carson refinery to increase gasoline output.
But Cook remained noncommittal on a target date for the introduction of new EC-type gasolines, saying it depended on the direction Congress went with proposed clean air legislation.
The firm’s earnings were boosted this year by a change in accounting procedures but were depressed by provisions for taxes and future environmental cleanup costs. Last year’s earnings were boosted by a public offering of Lyondell Petrochemical Co.
