Exxon Mobil Leaps 51% in First Quarter on Strong Prices

Exxon Mobil Corp., the No. 1 oil company, said Monday that first-quarter earnings jumped 51% as it cashed in on strong crude oil and natural gas prices as well as better profits from refined fuels such as gasoline.

The company, which last year set a record for the world’s highest corporate profits, recorded first-quarter income of $5.05 billion, or $1.44 a diluted share, excluding merger effects, up from $3.35 billion, or 95 cents a diluted share, in the year-earlier period. Revenue rose 6% to $57.28 billion.

The results far surpassed analysts’ consensus forecast of $1.35 a share, according to First Call/ Thomson Financial.

The strong profit performance came amid steady escalation of gasoline prices. According to the Lundberg Survey of 8,000 stations nationwide, the average price of gasoline is now at $1.67 a gallon--up 13 cents from the previous two weeks--with prices averaging $1.95 in San Francisco. Pump prices in many parts of the country may exceed $2 this summer.

Meanwhile, Conoco Inc., the No. 4 U.S. oil company, said profit jumped 73% in the first quarter to $616 million, or 97 cents a share, on a 22% rise in revenue to $10.6 billion.

Analysts said Exxon Mobil was able to earn more revenue without much increase in production by raising its profit margins. Crude oil production inched upward less than 1%, while natural gas production fell about 1%, for which the company cited the shutdown of an Indonesian plant because of fighting between government troops and separatist rebels in the province of Aceh.

At the end of the first quarter, Exxon Mobil had a debt-to-capital ratio of about 2.5%, its lowest since the early 1980s. The strong balance sheet meant Exxon Mobil’s financing costs fell by two-thirds, saving the company $144 million compared with the first three months of last year. The company spent some of its cash--$1.44 billion--to buy back stock.

Profit at Exxon Mobil’s exploration and production unit, which sees the biggest effects of oil and natural gas prices, grew 37% to $3.8 billion.

Its downstream--refining, marketing and transportation business--showed better results too, thanks to improved profit margins on fuels such as gasoline from its refineries.

The chemicals business, however, hurt Exxon Mobil and promises to take a bite out of results at other integrated oil companies. Rising costs for crude oil and natural gas have made feedstock for chemicals expensive, and sales of chemicals have slowed throughout the industry alongside the faltering U.S. economy.

Overall, Exxon Mobil’s latest earnings exclude an after-tax gain of $40 million from asset sales required as part of Exxon’s takeover of Mobil and $90 million of merger expenses.

Completed in late 1999, the combination of Exxon and Mobil has turned out to be a better deal than expected for the oil company. Savings and benefits from the merger were initially forecast to be in the neighborhood of $2.8 billion. Exxon Mobil has steadily raised that estimate, however, and said Monday that the figure should reach more than $7 billion by 2002.

Shares of Irving, Texas-based Exxon Mobil rose $2.83 to close at $88 on the New York Stock Exchange.

At a Glance

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

* American Express Co. said its profit fell 18% in the first quarter to $538 million, or 40 cents a share, meeting its lowered expectations, because of bond losses and slack spending by customers. The financial services company best known for its signature green charge cards said revenue rose 2% to $5.38 billion. American Express also said it expects the weakened stock market to continue to tear into fees, reiterating that it is unlikely to report the 12% earnings-per-share growth it had anticipated for 2001. Analysts had lowered their first-quarter estimates to an average of 39 cents from 51 cents after the company’s warning this month.

* Cardiac device maker Guidant Corp. reported a 6.8% rise in first-quarter earnings to $126.9 million, or 41 cents a share, a penny better than forecasts, on a 9% rise in revenue to $671 million. The company also announced a recall of some implantable defibrillators that will contribute to a charge against first-quarter earnings and lower-than-expected sales and profit for the second quarter. No patients have been harmed as a result of the defect in the device, Guidant said. Revenue rose 9% to $671 million in the first quarter. Guidant said it expects second-quarter profit of 35 cents to 39 cents a share, contrasted with analysts’ consensus estimate of 42 cents.

* Hasbro Inc. reported a first-quarter loss of $25 million, or 15 cents a share, compared with a profit of $15.1 million, or 8 cents, a year ago, as the toy maker suffered from declining sales of the Pokemon games that drove revenue a year earlier. Analysts on average expected a much smaller loss of 6 cents, with estimates ranging from 1 cent to 9 cents. Revenue fell 40% to $463.3 million. Hasbro executives said the company remains on track to deliver on profitability goals for the year but declined to give specific guidance.

* HCA-The Healthcare Co. said first-quarter profit rose 8% to $331 million, or 60 cents a share, including certain one-time items, as the biggest U.S. hospital company raised prices and treated more patients. Earnings per share excluding the items was 59 cents, matching forecasts. The company, which is trying to settle a government health-care fraud investigation, said revenue rose 5.4% to $4.5 billion. Chief Executive Jack Bovender Jr. also said the government has demanded too much to settle two remaining civil fraud allegations and HCA may fight the case in court. Bovender said the demand exceeds the “reasonable range” the company is willing to pay to resolve the case or litigate it. He didn’t say what the range was.

* Lexmark International Inc. said first-quarter profit declined a slight 0.6% to $79.7 million, or 60 cents a share, two cents better than analyst forecasts. The maker of computer printers said revenue rose 12% to $999 million.

* PepsiCo Inc. said first-quarter profit rose 18% to $498 million, or 34 cents per share, a penny better than forecasts, led by strong sales of new drinks at its Pepsi-Cola North America division and volume gains across all divisions. Net sales rose 8% to $4.54 billion. The Frito-Lay snack unit, Pepsi’s largest division in terms of revenue, accounted for more than 74% of operating profit. Its sales rose 6% to $2.93 billion. PepsiCo also said it sees its strong earnings and sales growth continuing for the rest of the year, but cautioned analysts against raising their forecasts.

* Safeco Corp. said first-quarter operatig earning rose 94% to $12 million, or 9 cents a share, a penny better than forecasts, but warned that spring Midwest storms would cut current-quarter profit. The insurance company, which is trying to turn around recent losses and restructure its balance sheet under a new management team, also said it took a $916.9-million charge in the quarter to write off goodwill on acquisitions, which resulted in a large net loss. Revenue declined 1% to $1.74 billion.

* SBC Communications Inc. said its first-quarter profit fell 9% to $1.74 billion, or 51 cents a share, meeting lowered forecasts, due to the slowing economy and costs to build its new Internet and long-distance telephone operations. Revenue rose 4.7% to $13.1 billion. SBC, owner of the dominant local telephone companies in the Southwest and Midwest, also warned that profit for the full year would fall below expectations of $2.46 a share. It now expects full-year earnings in the range of $2.35 to $2.40.

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Earnings Reports

A sampling of companies reporting quarterly earnings Monday, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.

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Analysts’ % above/ Year- Year- Ticker est. Actual below ago over-year Company symbol EPS EPS estimate qtr. % change EOG Resources EOG $1.59 $1.79 13% $0.33 442% Conoco COCB 0.92 0.97 5 0.62 56 Novellus NVLS 0.61 0.62 2 0.45 38 Convergys CVG 0.34 0.34 0 0.28 21 Pactiv PTV 0.18 0.18 0 0.15 20 Allegheny Energy AYE 0.91 0.91 0 0.78 17 Praxair PX 0.74 0.77 4 0.71 8 Ameren AEE 0.49 0.48 -2 0.45 7 Ashland ASH 0.36 0.37 3 0.35 6 Kimberly-Clark KMB 0.85 0.84 -1 0.80 5 Ralston Purina RAL 0.31 0.27 -13 0.28 -4 Archer-Daniels ADM 0.23 0.15 -35 0.16 -6 Sherwin-Williams SHW 0.23 0.23 0 0.25 -8 Tupperware TUP 0.33 0.33 0 0.37 -11 Air Prod & Chem APD 0.52 0.54 4 0.62 -13 CSX CSX 0.14 0.10 -29 0.14 -29

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Year-over-year growth and percentage changes are based on earnings-per-share figures and may differ from percentage changes based on total profit.

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