Exxon, the US oil and gas group, on Friday broke the record it set last year for the largest profit for a listed company, reporting net income of $45.2bn for 2008, in spite of a steep fall in profits in the fourth quarter.
However, the company, the world’s largest by market capitalisation, said it would continue its share buybacks in the first quarter of 2009 at a slightly lower rate than last year.
Exxon’s results came as Chevron, the US’s second-biggest oil company, said a one-time gain on an asset exchange enabled it to report a rise in fourth-quarter net income.
For the quarter, Chevron reported net income of $4.9bn, or $2.44 per share, up from $4.88bn, or $2.32 per share, a year earlier.
Exxon’s net income was $7.82bn, down 33 per cent from the equivalent period of 2007, because of the fall in oil prices.
The number was ahead of the average of analysts’ expectations, however, and Exxon shares rose 2 per cent in early trading.
The run-up in commodity prices earlier in 2008 left Chevron with full-year revenues of $265bn, up from $214bn in 2007, and full-year net income of $23.93bn, up 28 per cent.
Exxon’s full-year revenues were $477.4bn, up from $404.6bn in 2007. Its net income for the year rose 11 per cent to $45.2bn.
Both companies said they would continue massive investments in capital and exploration, as others scaled back spending from 2008 and even initiated job cuts.
Most of the fall in Exxon’s quarterly profits came from the upstream business, oil and gas production, where there was a decline of 31 per cent to net income of $5.63bn in the quarter. The US downstream business – refining and marketing – was also hit, swinging from a $622m profit to a $20m loss in the fourth quarter.
Exxon’s capital spending rose by 25 per cent last year to $26.1bn.
Rex Tillerson, chairman and chief executive, said Exxon’s “financial strength continued to support its disciplined capital investment approach in the midst of a growing global economic slowdown”.
Mr Tillerson said in December that he saw no reason to adjust the company’s $125bn five-year capital spending programme.
Exxon’s share buyback programme is continuing, with share purchases worth $7bn planned for the first quarter: a rate not far off the $35.7bn buyback last year.
That approach contrasts with Royal Dutch Shell, Europe’s biggest oil company, which earlier this week described share buybacks as an “up-cycle phenomenon”.
Exxon earlier in the week declared a dividend of 40 cents for the first quarter, up 14 per cent from the equivalent period of 2007.
Chevron spent $23bn in capital and exploratory projects in 2008 and said it would keep that budget steady at $23bn this year.
Reprinted from: FT.com
