Oil Prices Propel Profits at Exxon Mobil, Chevron

Exxon Mobil Corp. and Chevron Corp., the two largest U.S. oil companies, said second-quarter profits more than doubled to record levels, thanks to soaring oil and natural gas prices.

No. 1 Exxon Mobil said operating earnings jumped to $4.15 billion, or $1.18 a share, from $1.86 billion, or 53 cents, easily beating analyst estimates of $1.07 a share.

The Irving, Texas-based company’s results were the highest quarterly profit ever for a U.S company.

San Francisco-based Chevron said its operating profit climbed to $1.14 billion, or $1.75 a share, from $484 million, or 73 cents. The record performance was in line with analyst expectations.

“Although all of our businesses are making strides in improving profitability, the company’s outstanding financial performance this year primarily reflected the strength of our exploration and producing operations,” Chairman and Chief Executive Dave O’Reilly said.

He added that more than 90% of the improvement in earnings came from Chevron’s exploration and production business. Chevron’s worldwide oil and gas production rose 2% from a year ago.

The combination of soaring crude oil and natural gas prices lifted Chevron’s earnings from its U.S. exploration and production business 168% to $388 million.

Profit in Chevron’s international exploration and production business soared 162% to $580 million. But Chevron’s refining and marketing business struggled, despite some of the strongest wholesale and retail gasoline prices on record in the United States.

Exxon Mobil, which has sold its oil refinery in Benicia, Calif., and a string of retail stations to meet antitrust requirements for its merger last year, said income from its refining and marketing arm climbed 109% to $998 million.

But Exxon Mobil said most of the improvement came not from its marketing or retail business but rather from its refining operations.

Despite the strong profits, shares of Exxon Mobil lost $1.88, closing at $75.38 on the New York Stock Exchange. Chevron fell 6 cents to $77.31, also on the NYSE.

Fadel Gheit, an analyst with Fahnestock & Co. in New York, said the less-than-enthusiastic response from investors may be based on concerns that oil companies won’t be able to keep up red-hot profits in quarters to come as oil prices decline.

At a Glance

Other earnings, excluding one-time gains or charges unless noted, include:

* Amerada Hess Corp., an oil exploration company, said second-quarter earnings rose more than fivefold to $202 million, or $2.24 a share, from $37 million, or 41 cents, because of higher crude oil prices and production. Analysts expected $2.17 a share. Revenue soared 77% to $2.71 billion.

* Avery Dennison Corp. said second-quarter net income rose 14% to $72.8 million, or 73 cents a share, as sales rose 7% to $993.4 million. Pasadena-based Avery announced its results after the close of trading.

* Cardinal Health Inc. said its fiscal fourth-quarter profit rose 24% to $202 million, or 72 cents a share, a penny higher than estimates, driven by strong sales in its pharmaceutical distribution business. Revenue grew 25% to $8.21 billion at the medical supplies wholesaler.

* Cheesecake Factory Inc. said second-quarter net income rose 55% to $8.2 million, or 25 cents a share, as revenue jumped 23% to $105.2 million. The Calabasas Hills-based company said sales at restaurants open at least a year grew 4.9%.

* Kimberly-Clark Corp. said second-quarter earnings rose 14% to $441.6 million, or 81 cents a share, a penny better than forecasts, with help from cost-cutting. Sales rose 10% to $3.46 billion.

* Louisiana-Pacific Corp.’s second-quarter earnings fell 47% to $43.7 million, or 42 cents a share, as prices for one of its main lumber products plummeted. Sales rose 1.2% to $778.1 million.

* McDonald’s Corp.’s second-quarter profit rose 2% to $525.9 million, or 39 cents a share, matching estimates. The company said it faced tough comparisons to the year-earlier quarter, when it benefited from hugely successful promotions using Teenie Beanie Babies in its Happy Meals. Sales systemwide, which includes franchised restaurants, increased by 3% to $10.24 billion.

* Drug wholesaler McKesson HBOC Inc. said fiscal first-quarter profit fell 20% to $63.6 million, or 22 cents a share, as purchases of its health-care software continued to lag. The results met analyst expectations. Revenue, excluding sales to customers’ warehouses, rose 15% to $7.4 billion, led by drug sales to pharmacies and hospitals. Software sales fell 8% to $30.2 million.

* Omnicom Group Inc., the second-largest advertising group in the world, said its second-quarter profit rose 19% to $127.4 million, or 70 cents a share, two cents better than forecasts. Revenue from commissions and fees rose 20% to $1.52 billion.

* Park Place Entertainment Corp. said second-quarter profit from operations rose 24% to $56 million, or 18 cents a share, matching forecasts, as revenue climbed 69% to $1.25 billion. Park Place, the world’s largest casino company, benefited from the opening of its new Paris Las Vegas casino and from higher winnings at the tables of Caesars Palace Las Vegas.

* Reebok International Ltd. said profit more than doubled in the second quarter, far surpassing estimates, as costs fell and gross margins improved. Reebok’s earnings climbed to $10.7 million, or 19 cents a share, from $4.6 million, or 8 cents, a year ago. Analysts had forecast earnings of 10 cents. Sales fell 1.8% to $685.1 million.

* Royal Caribbean Cruises Ltd. said second-quarter profit rose 9.1% to $108.3 million, or 56 cents a share, a penny better than forecasts, as revenue grew 10% to $680.7 million. The cruise line operator said passenger capacity rose 11% as it introduced new vessels.

* T. Rowe Price Associates Inc. said second-quarter profit rose 29% to $69.3 million, or 54 cents a share, one cent higher than forecasts, as revenue rose 22% to $301 million.