(Reuters) – Exxon Mobil shares fell about 2 percent in early trading on Wednesday after the largest oil producer in the United States warned of a decline in refining profits in the fourth quarter and weak revenues in its operations.
This earnings snapshot from the industry leader points to a challenging environment as companies face pricing pressures amid volatile demand.
Exxon expects fourth-quarter profits to be about $1.75 billion lower than the previous quarter.
For much of last year, Exxon and other major oil companies faced declining profitability from refining crude oil and selling petroleum products as the post-pandemic demand boom ended. The opening of major plants around the world also affected the growth of refining margins.
In the third quarter, Exxon’s profits fell by 5% compared to the same quarter last year, while Chevron’s profits fell by 21%.
Exxon’s earnings update “is consistent with reviews made for independent refiners and other major companies with significant exposure to refining,” Biraj Purkataria, oil analyst at RBC Capital Markets, said in a note to investors.
He added that this take is likely to be viewed as “negative” and will weigh on stocks in the near term.
Exxon is one of the world’s largest refiners with a total global refining capacity of 4.5 million barrels of oil per day and is also one of the world’s largest manufacturers of commodities and specialty chemicals.
The company is expected to post earnings of $1.76 per share in the fourth quarter, according to data compiled by LSEG. The oil major reported earnings of $2.48 per share the previous year.
Exxon’s price-to-earnings (PE) ratio is 13.56 compared to 16.43 for Chevron. A lower price multiple indicates a more attractive investment opportunity.
Exxon shares rose 7.6% in 2024, underperforming the S&P 500’s gain of 23.3%.
(Reporting by Mrinalika Roy in Bengaluru; Editing by Sriraj Kalluvila)
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