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Exxon Mobil Reports 49% Drop in 4th-Quarter Profit

Earnings: Other energy companies' results also tumble from last year's record highs as the recession halts demand.

January 24, 2002|PAUL THOMASCH | REUTERS

Exxon Mobil Corp., the world's largest publicly traded oil company, Wednesday reported a 49% drop in fourth-quarter profit as the recession put the brakes on petroleum demand and sent prices tumbling from their year-ago highs.

The fortunes of Irving, Texas-based Exxon Mobil and other energy companies have declined sharply in recent quarters alongside oil and natural gas prices. Compared with the last three months of 2000, when the industry posted record profits, oil prices fell by about a third in the fourth quarter of 2001. Natural gas prices dropped more than 60%.

With energy prices way down, Exxon Mobil's fourth-quarter net income fell to $2.68 billion, or 39 cents a diluted share, from $5.22 billion, or 75 cents, a year earlier.

Revenue dropped 26%, to $47.3 billion.

Especially hard hit was the company's exploration and production business, where earnings fell 55%, to $1.67 billion.

After a fourth quarter when U.S. crude prices averaged just more than $20 a barrel, Amerada Hess Corp. also reported a roughly 85% decline in profit Wednesday. Kerr-McGee Corp., an oil exploration company, and Sunoco Inc., a refining and marketing company, posted fourth-quarter losses.

To combat low prices, OPEC and its leading export rivals agreed late last month to cut nearly 2 million barrels per day of oil production from the world market.

It marked OPEC's fourth production cut in a year, and included promises by competing exporters such as Russia, Norway and Mexico to help by slicing their exports.

So far, the cuts have done little to lift crude prices. Instead, a mild winter has capped consumption of heating oil, leading companies to slow down output at their refineries and creating a surplus of petroleum.

As a result, few experts see profits for companies such as Exxon Mobil improving much from the fourth quarter.

Shares of Exxon Mobil rose 88 cents to close at $38.90 on the New York Stock Exchange.

Exxon Mobil's fourth-quarter results were slightly better than experts had forecast, thanks in large part to earnings from its chemicals and refining and marketing business that were "considerably stronger" than expected, said Gene Nowak, an analyst with ABN Amro.

Excluding $200 million of expenses relating to Exxon's 1999 acquisition of Mobil, profit slipped to 42 cents a diluted share from 73 cents a share the previous year. Analysts on average had been forecasting earnings of 39 cents a share.

In the downstream--refining, marketing and transportation-- the company earned $1.02 billion during the fourth quarter, compared with $1.16 billion a year earlier.

Its chemical earnings slipped to $209 million from $215 million.

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

* Merrill Lynch & Co. lost a record $1.3 billion in the fourth quarter, its first unprofitable quarter since 1998, as the biggest U.S. securities firm by capital paid for cutting jobs and closing offices. Merrill lost $1.51 a share, compared with a profit of $422 million, or 44 cents a share, in the year-ago period. Excluding the $1.7 billion in restructuring costs and including expenses related to the Sept. 11 terrorist attacks, Merrill had a profit of $461 million, or 48 cents a share. The firm said costs associated with the attacks were $43 million, or 3 cents a share.

* DuPont Co., the second-largest U.S. chemical maker, said fourth-quarter profit fell 62% because of lower demand and reduced prices for its paints, fibers and plastics. Profit from operations fell to $98 million, or 10 cents a share, from net income of $261 million, or 25 cents, a year earlier. Sales fell 17% to $5.2 billion.

* Bank of America Corp., the third-biggest U.S. bank, said fourth-quarter profit rose 49% as falling interest rates boosted lending. Net income increased to $2.06 billion, or $1.28 a share, from $1.39 billion, or 85 cents, a year earlier. Mortgage-banking income rose 15% to $167 million as consumers refinanced their homes at a record pace. Credit card income grew 6% to $629 million. Investment banking income rose 29% to $473 million. Total net interest income, which the bank makes from lending, rose 16% to $5.5 billion.

Bank of America wrote off $1.19 billion in loans in the fourth quarter, up 11% from a year earlier. Charge-offs to commercial borrowers, including Enron Corp., rose by $50 million. Consumer charge-offs rose by $69 million from a year earlier.

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