ExxonMobil (NYSE: XOM) just lately gave buyers a glimpse into its upcoming first-quarter earnings report. The oil big expects to report a roughly $900 million improve in its quarterly revenue. A mix of increased oil and pure gasoline costs and enhancing oil refining margins helped gasoline the elevated profitability.
Sadly, the sturdy market circumstances that helped drive its earnings increased within the first quarter vanished within the early days of Q2. Crude costs have crumbled because of issues about how increased tariffs will impression the worldwide economic system. On a extra optimistic observe, Exxon is working arduous to bolster its earnings capability sooner or later.
ExxonMobil offered some preliminary numbers for the primary quarter. The corporate expects its earnings to be about $900 million increased than within the fourth quarter, when it reported $7.4 billion in revenue. That may additionally put its earnings up about $100 million in comparison with the primary quarter of final 12 months, when it posted $8.2 billion in revenue.
The corporate benefited from increased oil and gasoline costs within the quarter. Brent, the worldwide oil benchmark worth, averaged just below $75 per barrel, a 1.3% improve from the fourth quarter. In the meantime, pure gasoline surged 30%, fueled partly by a chilly winter within the U.S., which drove up demand. Exxon additionally benefited from increased oil refining margins within the quarter.
Whereas oil and gasoline costs rose final quarter, they’ve tumbled within the early days of the second quarter. Brent Crude has plunged greater than 10% over the previous week, falling to round $65 per barrel on tariff issues. In the meantime, the worth of pure gasoline within the U.S. has fallen greater than 5% this week.
If costs stay at their present ranges or fall additional, it’s going to have a significant impression on Exxon’s ends in the approaching quarters. In the meantime, if tariffs sluggish the worldwide economic system, oil refinery margins would additionally take a success, additional impacting Exxon’s earnings.
Whereas Exxon’s earnings would possibly dip within the close to time period, the corporate’s long-term earnings outlook is vivid. Exxon is investing closely in increasing its finest sources, which have the bottom working prices and highest margins. The corporate additionally continues to be laser-focused on stripping structural prices out of its enterprise.
This technique paid off final 12 months. The oil big delivered $33.7 billion of earnings and $55 billion in money move from operations, its third-best 12 months in a decade. The corporate delivered that sturdy efficiency though oil costs have been in the midst of its 10-year annual vary, whereas refining and chemical margins have been a lot decrease than common. It benefited from the expansion in its highest-margin property and its cost-saving initiatives.