Slack Gasoline Demand Hurts Chevron and Shell
Chevron Corp. on Friday reported a 41% drop in second-quarter profit, and Shell Oil Co. posted a $68-million loss, the latest evidence of the recession’s drag on U.S. oil companies.
Shell’s loss was tied to charges associated with work force reduction, but the results were still drastically lower than last year’s performance. Both companies blamed recession-dampened demand for gasoline and petroleum byproducts and depressed natural gas prices for the poor showings.
These factors more than offset any gains from the rise in crude oil prices resulting from the Persian Gulf War.
Earlier this week, Mobil Corp., Texaco Inc., Sun Co. and Phillips Petroleum all reported big declines in profits. Exxon Corp., the nation’s largest oil company, posted a small gain, but it compared against an especially poor quarter last year.
Chevron
The nation’s fourth-largest oil company said second-quarter earnings totaled $384 million, or $1.09 per share, down from $648 million, or $1.83 per share earned in the 1990 quarter.
San Francisco-based Chevron said revenue rose 9% to $9.71 billion from $8.93 billion last year.
Earnings were hurt by lower natural gas prices, lower prices and demand for chemical products and gasoline and unscheduled refinery closures, the company said.
Higher crude oil prices increased revenues but failed to offset the profit erosion.
“Our domestic downstream business basically broke even for the quarter, whereas last year’s quarter enjoyed unusually strong product sales margins,” Chevron Chief Executive Ken Derr said in a statement.
Net income for the first six months of 1991 was $941 million, or $2.68 per share, down 16% from the $1.12 billion, or $3.16 per share, earned during the year-ago period. Revenue for the period grew 13% to $20.55 billion, from $18.25 billion in 1990.
Shell
Shell Oil Co.’s loss of $68 million compared to a $161-million profit for last year’s second quarter. Revenue this year totaled $5.35 billion, up 3% from $5.17 billion.
Houston-based Shell, the sixth-largest U.S. oil company, does not report per-share earnings because it is a wholly owned subsidiary of Royal Dutch-Shell Group based in The Hague, Netherlands.
Higher crude prices helped earnings from oil and gas exploration and production. But profits from oil products were sharply lower because of decreased sales and narrow profit margins, the company said.
Shell said it took a $90-million after-tax charge for costs associated with its work force reduction. The firm said early this month that it would trim its 31,000 U.S. work force by up to 15% due to disappointing financial results.
For the first six months of 1991, the company said it earned $57 million, down from last year’s $363 million. Revenue increased to $11.01 billion from last year’s $10.93 billion.
ROUNDUP
For quarter ended June 30, unless noted. Amounts in parentheses are losses. Percentage changes are comparisons to year-ago quarter. Net income figures include extraordinary items and discontinued operations if applicable.
Net Income Revenue Company Per share In thou. % Chg. In mill. % Chg. Aetna Life 1.44 159,000 -21.6 4,706 -2.2
The company said profits fell primarily because of losses related to its real estate investments.
Net Income Revenue Company Per share In thou. % Chg. In mill. % Chg. Amdahl 0.06 6,357 -86.3 450.6 -13.2
The computer maker cited softness in the European marketplace, the growing strength of the U.S. dollar and tighter margins.
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