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Exxon Mobil Posts Matrix-Ridiculous Profits

-Rudebwoy_Chin-

TRIBE Member
This may be old news to some, but I still find the figure astonishing. If you don't want to read, the jist is as follows:

- Oil prices hit a high not seen in some time last year
- Exxon Mobil posted a PROFIT of 36.1 billion USD for 2005. The largest net-income in US History
- That little 0.1 is a 100 million fucking dollars

The company recognized consumers' concerns about high gas prices but stressed in its quarterly statement that its record-setting year would help customers in the long run.
The sheer amount still amazes me. I am definitely working in the wrong industry.


Exxon Mobil: Year Ends In A Profit Gusher
Oil producer makes no apologies for record-setting year.

By Jonathan Katz

Feb. 9, 2006 -- A year punctuated by windfall profits is usually good news for manufacturers unless you're Big Oil. Irving, Texas-based Exxon Mobil Corp., the world's largest publicly traded oil company with 2005 revenues of $371 billion, is one of the latest oil producers to defend record profits amid high fuel prices.


Indeed, 2005 proved to be a positive year financially for Exxon Mobil -- one of IndustryWeek's IW 50 Best Manufacturing Companies for 2005. The company reported on Jan. 30 a record profit of $36.1 billion for the year, a 43% gain from 2004 and the largest annual net income reported in U.S. history. Fourth-quarter profits increased 27% from the previous year to $10.7 billion.

More than a week before the results were announced, the company already was preparing for a backlash by holding an hour-long electronic news conference, according to the Los Angeles Times. Vice President Ken Cohen defended company profits in the Jan. 21 L.A. Times story, saying high profits for energy companies simply reflect an"immense" industry. He added that Exxon Mobil only supplies 2% of the world's energy and 3% of its oil.

Exxon Mobil Corp.
At A Glance

Exxon Mobil Corp.
Irving, Texas
Primary Industry: Petroleum and Coal Products
Number of employees: 85,900
2004 In Review
Revenue: $293.1 billion
Profit Margin: 8.6%
Sales Turnover: 1.5
Inventory Turnover: 15.1
Revenue Growth: 20.9%
Return On Assets: 14.5%
Return On Equity: 28.2%

The company recognized consumers' concerns about high gas prices but stressed in its quarterly statement that its record-setting year would help customers in the long run.

"There is a great deal of public interest in global energy prices," said Exxon Mobil Chairman Rex W. Tillerson in a Jan. 30 statement. "We recognize that consumers worldwide want and need reliable supplies of affordable energy to fuel their vehicles, light and heat their homes and run their businesses. Our strong financial results will continue to allow us to make significant, long-term investments required to do our part in meeting the world's energy needs."

In an advertisement published in several newspapers, the company said the oil industry's average profits of 8.2 cents to the dollar in 2005 are comparable to the national average of 6.8 cents to the dollar for the year. The company's statements were further backed by President Bush who said oil profits are "determined by the marketplace," according to an Associated Press story published in the Washington Post Feb. 1.

While the public continues to question Big Oil profits and politicians vacillate on the idea of a windfall profit tax for oil companies, Exxon Mobil is pushing forward with expansion and exploration efforts. The company signed an agreement in December 2005 with Libya's National Oil Corporation to begin exploration activity in Libya. The contracted area comprises 2.5 million acres offshore in water depths ranging from approximately 10 feet to more than 10,000 feet. The company also announced in 2005 that it began production from oil fields in West Africa and Eastern Russia. The company will produce 250,000 barrels of oil per day by the end of 2006 from the Eastern Russia Chayvo field. Domestic gas sales in Eastern Russia started at 60 million cubic feet per day and are expected to increase to approximately 250 million cubic feet per day by 2010. Earlier in 2005 the company broke ground on a new refinery in the Fujian Province of China. The company also has proposed constructing a new refinery in Arizona.



Sauce
 

The Tesseract

TRIBE Member
I dunno... but it might have something to do with the fact that they didn't lose a tanker this year.

hehe




Seriously though... that's some profit...
 

Subsonic Chronic

TRIBE Member
Weren't the oil companies raising a huge fit and demanding government compensation for the losses they anticipated from the hurricane season?
 
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AdRiaN

TRIBE Member
Originally posted by -Rudebwoy_Chin-
The sheer amount still amazes me.
Why? The amount of profit is only relevant in the context of the size of the company.

Would you feel more comfortable if Exxon Mobil earned $3 billion instead of $36 billion? That's still a pretty big number, but only represents a return of 1.45% on its assets and 2.82% on its equity. You can earn a better return by putting your money into an ING savings account!
 

-Rudebwoy_Chin-

TRIBE Member
Re: Re: Exxon Mobil Posts Matrix-Ridiculous Profits

Originally posted by AdRiaN
Why? The amount of profit is only relevant in the context of the size of the company.

Would you feel more comfortable if Exxon Mobil earned $3 billion instead of $36 billion? That's still a pretty big number, but only represents a return of 1.45% on its assets and 2.82% on its equity. You can earn a better return by putting your money into an ING savings account!
Sorry, what's your point?

Why does a profit of 36.1 billion amaze me? Cuz that's a lot of fucking money at someone's expense. Strange you would highlight someone's personal astonishment from all of that.
 

Agent Smith

TRIBE Member
Originally posted by Gizmo
Bingo.
That net margin is still pretty damn good... especially in an industry that size.

Can you think of any other capital intensive mega-industry that has had as much financial success over time?
 

Gizmo

TRIBE Member
Absolutely, and for a relatively mature industry like oil exploration, even more so. But their overall margins haven't changed that much since the advent of the oil boom. In the case of BP Plc and Chevron-Texaco, their margins are actually down.
 
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Agent Smith

TRIBE Member
Originally posted by Gizmo
Absolutely, and for a relatively mature industry like oil exploration, even more so. But their overall margins haven't changed that much since the advent of the oil boom. In the case of BP Plc and Chevron-Texaco, their margins are actually down.
I'd like to know what other industries you are talking about.
 

-Rudebwoy_Chin-

TRIBE Member
Originally posted by deep
Revenue: $293.1 billion

Profit Margin: 8.6%
That figure is from 2004.
2005 revenues: $371 billion
Profit Margin: 9.73%
Industry average: 8.2%

I find it interesting that Exxon only supplies 3% of the world's oil supply as well.
 

Boss Hog

TRIBE Member
Adrian's part of the matrix.

Not only Exxon reported record profits from the last quarter, but also BP and Shell - basically all of the oil companies have reported record profits.

Yes, the projected damage from hurricane season was a factor, but they weren't hit as hard as they thought, which was a contributing factor to their profits. But the oil companies use that as justification to spike the prices, and take their sweet fuck time putting them back down again.

I have to go out but if people keep defending oil profits I'll be back.

US Royalty Plan to Give Windfall to Oil Companies
 
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Subsonic Chronic

TRIBE Member
Originally posted by Boss Hog
Adrian's part of the matrix.
Why you gotta be like that?

It happens in every political thread where either Adrian, or silver1, or someone with an opposing viewpoint will make a very *valid* argument, and you always brush it off as "oh you're one of them", "typical for the Republican cheerleaders" or shit like that.

Meanwhile, I bet you'd be the first to complain that someone isn't "participating in the discussion" if they brush off all of your comments as "typical conspiracy theorist", or "oh, another bleeding heart liberal", etc...
 

Gizmo

TRIBE Member
Originally posted by Agent Smith
I'd like to know what other industries you are talking about.
Sorry, I saw the other industry bit after you had edited it, and was just responding to your initial post.

Well, I think the banking industry has high margins that do not seem to attract as much flack as oil. Bank of America recorded some 16 billion in net income, on margins of 31.37%, without as much flack.

For capital intensive industries, no, in a short answer, there probably hasn't been any industry that has consistently made as much money on the same scale globally as oil on an absolute basis, but there are some on a percentage basis when you consider the overall global market.

Gold companies have had a good run of it, For example, Barrick's price to earnings ratios and margins have remained fairly consistent over the last decade.
 
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Incrimin8

TRIBE Member
you would think with all oil companies posting record profits last year they could at least keep the f'n $/litre the same for at least a week at a time.
 

Agent Smith

TRIBE Member
Originally posted by Gizmo
Sorry, I saw the other industry bit after you had edited it, and was just responding to your initial post.

Well, I think the banking industry has high margins that do not seem to attract as much flack as oil. Bank of America recorded some 16 billion in net income, on margins of 31.37%, without as much flack.

For capital intensive industries, no, in a short answer, there probably hasn't been any industry that has consistently made as much money on the same scale globally as oil on an absolute basis, but there are some on a percentage basis when you consider the overall global market.

Gold companies have had a good run of it, For example, Barrick's price to earnings ratios and margins have remained fairly consistent over the last decade.
You're bang on with the FS industry, but I think they are a bunch of crooks too ;)

Gold has had a fantastic run, but I think that if you look at their historical financial health over the full cycles of its core commodity price, it would vary much more than large oil companies.

To be honest, I'm purely hypothesizing... I haven't looked at the exact numbers.
 

octo

TRIBE Member
whenever gas is cheap i buy a jerry can, fill it up and store it in my basement. so far i've got 10.

when oil runs out i will be the new Exxon Mobil
 
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deep

TRIBE Member
Originally posted by -Rudebwoy_Chin-
That figure is from 2004.
2005 revenues: $371 billion
Profit Margin: 9.73%
Industry average: 8.2%

I find it interesting that Exxon only supplies 3% of the world's oil supply as well.
The simple dollar value of profits doesn't consider the context they occur in. Namely what percentage those profits are of revenues, what the difference there is between money coming in from revenues and money going back out from costs. If profits are very small compared to a large amount of revenue, then costs (margins) of that industry or business are making it hard to actually make a buck.

The company keeps less than dime off every dollar it makes in sales, after costs have been accounted for. I suppose a comparison would be if you had 8-9% of your paycheque to save after bills and taxes had been paid. Not getting to keep a whole lot of what you worked for, or very profitable in other words. Further, a massive profit means little if it gets diluted across a bajillion investors or quickly reinvested in growing the business.

If this fairly low level of profitability given the effort expended is astonishing, do not look at industries like credit services, where industry average profit margins can run around 47%, company highs of 79%. 79 cents of every dollar made is kept as profit.

I'm not defending oil profits, just think it's a bit melodramatic to flip out over numbers that initially seem impressive but may not be once you start analyzing.
 
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-Rudebwoy_Chin-

TRIBE Member
Well stated Deep. But I think people are misinterpreting my original post. My shock does not come from the fact it's an oil company, the margins of the company, the fact that the profit came amidst an oil crisis, or anything else besides the fact that it is the most in US history.

Out of curiousity, which company had margins of 79% because that is matrix-ridiculous as well.
 

deep

TRIBE Member
Originally posted by -Rudebwoy_Chin-
Well stated Deep. But I think people are misinterpreting my original post. My shock does not come from the fact it's an oil company, the margins of the company, the fact that the profit came amidst an oil crisis, or anything else besides the fact that it is the most in US history.


I understand, but look at it this way. If any company is going to make the most profit out of all in a country, doesn't it make sense that it be the company whose operations underpin most aspects of the economy? Which again underscores it's not just the raw value of profit that is worth attending to but the context it occurs in.

Out of curiousity, which company had margins of 79% because that is matrix-ridiculous as well.
Allied Capital Corp, private equity investing.
 

Boss Hog

TRIBE Member
Originally posted by Subsonic Chronic
Why you gotta be like that?

It happens in every political thread where either Adrian, or silver1, or someone with an opposing viewpoint will make a very *valid* argument, and you always brush it off as "oh you're one of them", "typical for the Republican cheerleaders" or shit like that.

Meanwhile, I bet you'd be the first to complain that someone isn't "participating in the discussion" if they brush off all of your comments as "typical conspiracy theorist", or "oh, another bleeding heart liberal", etc...

Because Adrian's point of view always follows the bottom line of "if it's good for profits it's good for all" with little room for considering anything else.

That's why I gotta be like that.
 
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