Yet, ExxonMobil managed to achieve industry-leading returns in chemicals-related spending among major petrochemical companies (see chart below). In terms of the capital and exploration expenditures requirements or CAPEX, the Chemical segment only constituted a tiny fraction of ExxonMobil's total spending and looks set to remain so this year. "Chemical" to Retain Significant Role in Augmenting Earnings #I excluded the $2b impairment charge from the Q4 2016 upstream earnings for a more representative comparison with the other quarters. (Source: Data from company, charts by ALT Perspective) It is undeniable that Chemical quarterly earnings continued to drop through the year, though it should be comforting to know the last three months of the year is a seasonally weak quarter. However, this is more as a result of the strong recovery in the Upstream business, which is a good thing. From as high as 62% of the three segments, the contribution percentage of Chemical has fallen to 25% in the last three months of 2016. Nevertheless, the phenomenon is most obvious at ExxonMobil, compared to the other major integrated petrochemical producers such as Royal Dutch Shell (RDS.A) (RDS.B) and BP ( BP ).īased on the latest quarterly results, the significance of Chemical earnings to the bottom line has shrunk considerably. The expanding contribution of chemicals is not unique to ExxonMobil, looking at results for 2016 thus far among the oil majors.
However, an even bigger jump occurred in 2016, where the earnings from the Chemical segment in the first nine months of FY2016 represented more than half (61%) of the total earnings, amidst the poor performance of both the Upstream and Downstream segments. In 2015, after the crude oil prices plunged from above $100/bbl in 2014 to below $50/bbl, the chemicals segment finally proved to be significant to the bottom line, having increased its share of earnings to more than a quarter of the total. This is understandable, given the historically small "Chemical" contribution (less than one-fifth) to ExxonMobil's total earnings before 2015. (Source: Data from company, chart by ALT Perspective)Ĭhemical Segment Relegated to Second FiddleĪnalysts, reporters, and investors have generally trained their sights on the crude oil price movement as a proxy to determine the state of health or earnings outlook of ExxonMobil. Proceeds associated with asset sales contributed $2.1 billion in the fourth quarter alone, which is almost equivalent to the total amount in the past three quarters ($2.2 billion). This more than covered dividends and additions to property, plant and equipment. In the latest quarter, the cash flow from operations and asset sales reached $9.5 billion, a 51% increase from the previous quarter.
#Chart not yet updated for the latest quarter (+2% YoY) XOM Operating Revenue (Quarterly YoY Growth) data by YCharts This builds on the consistent momentum which began since the revenue growth bottomed at -37.1% Y-o-Y in Q3 2015. 4Q 2016 marks the first quarter since 2Q 2014 that the company has registered a positive year-on-year revenue growth. However, looking back a few more quarters, you will find that the current set of results are indeed good and a clear indication that progress continues to be made at the company. This could be attributed to the fact that the company has missed revenue expectations for the third consecutive quarter and investors have been numbed by another miss. On a day where another company, Under Armour ( UA) ( UAA), which plunged 25% after also announcing results that missed expectations, the 1% decline in ExxonMobil's share price looks to be a non-issue. An around $2 billion impairment charge largely related to its dry gas operations in the Rocky Mountains region significantly dragged down the earnings. Q4 2016 Results Demonstrate Continued RecoveryĮxxonMobil ( NYSE: XOM) announced fourth-quarter 2016 results today which missed both the revenue and the earnings expectations.
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