Exxon signals operating profits could double over Q1

Exxon signals operating profits could double over Q1
The Q2 results will be the first quarterly earnings report since Exxon decided to report results by four business units. (Reuters)
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Updated 02 July 2022

Exxon signals operating profits could double over Q1

Exxon signals operating profits could double over Q1
  • Energy prices have shot up this year with oil selling for more than $105 per barrel

HOUSTON: Exxon Mobil Corp. has signaled that skyrocketing margins from fuel and crude sales could generate a record quarterly profit, according to a securities filing.

Energy prices have shot up this year with oil selling for more than $105 per barrel and gasoline at about $5 per gallon in the United States. The enormous earnings are likely to ignite new calls for windfall profit taxes.

The largest US oil producer projected a sequential increase of about $7.4 billion in operating profits compared with the first quarter. In the first quarter, Exxon posted an $8.8 billion profit, excluding a Russia writedown.

The filing indicates a potential profit of more than $16 billion for the second quarter. The company’s peak quarterly profit was $15.9 billion in 2012.

The filing showed Exxon expects higher oil and gas prices will add about $2.9 billion to results. Margins from selling gasoline and diesel will add another $4.5 billion to operating profits.

“High energy prices are largely a result of underinvestment by many in the energy industry over the last several years and especially during the pandemic,” Exxon said in a statement on the profit gains.

Analysts tracked by IBES Refinitiv forecast a per share profit of $2.99, up from $1.10 in the same quarter a year ago. Official results for the period will be released on July 29, according to a summary of factors influencing the period disclosed late Friday.

Exxon’s profits led US President Joe Biden last month to say the company and other oil majors were capitalizing on a global oil supply shortage to fatten profits.

The company said it is investing more than any other producer in the US to expand oil and natural gas production, including in the Permian, the country’s largest unconventional basin.

US Representative Ro Khanna said Exxon’s record-breaking profits reinforce his call for Congress to pass a windfall tax on Big Oil.

“Big Oil companies should be providing relief to their customers, not pouring billions into stock buybacks to enrich their investors,” he said in a statement.

Exxon’s shares closed up 2.2 percent at $87.55 on Friday.

Exxon, which lost more than $22 billion in 2020, has been using the extra cash from higher energy prices sales to pay debt and raise distributions to shareholders. It plans to buy back up to $30 billion of its shares through 2023.

Despite losses during the pandemic, Exxon continued to invest in additional production and expects to increase output in the Permian by 25 percent in 2022, the company’s spokesperson said.

The second-quarter results will be the first quarterly earnings report since Exxon decided to report results by four business units, giving a more detailed breakout of its petrochemical operations. The snapshot showed that margins in its chemical and specialty products units were flat in the second quarter compared with the first.

The company estimated the impact of exiting Russia would cut oil and gas profits by about $150 million compared with the first quarter. Exxon wrote down $3.4 billion in Russia assets earlier this year.

Exxon also signaled a contribution of about $300 million from asset sales in the quarter.


TASI almost flat on higher inflation: Opening bell

TASI almost flat on higher inflation: Opening bell
Updated 12 sec ago

TASI almost flat on higher inflation: Opening bell

TASI almost flat on higher inflation: Opening bell

RIYADH: Saudi stocks started Monday’s session almost flat after the Saudi annual inflation rate increased to 2.7 percent in July, inciting uncertainty among investors.

TASI edged down 0.08 percent at 12,504, while the parallel market, Nomu, fell 0.16 percent at 22,005, as of 10:06 a.m. Saudi time.

Saudi Aramco shed 0.25 percent, despite achieving its highest quarterly profit since going public in 2019 with SR182 billion ($48.4 billion), a 90 percent jump over analysts' expectations.

Saudi Tadawul Group Holding Co. dropped 1.65 percent, following the announcement of a 23 percent decline in profits during the first half of the year to SR278 million.

Red Sea International Co. gained 4.96 percent to lead the gainers, after the real estate firm announced that its accumulated losses have been cut to zero, following a reduction in the company’s capital by SR298 million.

Saudi Printing and Packaging Co. climbed 2.45 percent, after the company narrowed its losses by 91.8 percent to SR2 million during the first half.

Basic Chemical Industries Co. lost 0.97 percent, despite achieving a 63 percent profit increase to SR46 million for the first half.

solutions by stc increased 0.43 percent, after its acquisition of Egypt’s Giza Systems has been approved by the Saudi competition authority.

Wafrah for Industry and Development Co. increased 1.86 percent, after the company swung to a profit of SR11 million during the first half of 2022.

Arabian Shield Cooperative Insurance Co. edged up 0.43 percent, despite a 30 percent profit decline to SR16 million for the first half.

The country's biggest lender Saudi National Bank declined 0.27 percent, while the Kingdom’s largest valued bank Al Rajhi fell 0.34 percent.


Here’s what you need to know before Tadawul trading on Monday

Here’s what you need to know before Tadawul trading on Monday
Updated 9 min 47 sec ago

Here’s what you need to know before Tadawul trading on Monday

Here’s what you need to know before Tadawul trading on Monday

RIYADH: Saudi stocks closed slightly lower on Sunday, tracking oil’s Friday drop.

TASI slipped 0.13 percent to 12,514, with shares of oil giant Aramco down 0.9 percent after reporting a record second-quarter profit of SR182 billion ($48.4 billion).

Aramco’s profit soared 80 percent in the second quarter of 2022 from SR95.5 billion a year earlier, beating the median of analysts’ forecasts with the highest quarterly profit since going public in 2019.

The Kingdom’s parallel Nomu market finished 0.08 percent higher at 22,041.

Elsewhere, Oman, Qatar, and Bahrain advanced 0.1, 0.4, and 0.8 percent, respectively, while the Kuwaiti index lost 0.7 percent.

Outside the Gulf, the Egyptian index EGX30 ended the session flat.

Oil prices continued to drop on Monday. Brent crude fell to $97 a barrel and US West Texas Intermediate reached $91.03 a barrel by 8:57 a.m. Riyadh time.

Stock news

Red Sea International Co. said its accumulated losses have dropped to zero, following an SR298 million capital reduction

Basic Chemical Industries Co. recorded a 63 percent profit increase to SR46 million for the first half of 2022

solutions by stc’s acquisition of a controlling stake in Egypt’s Giza Systems has been approved by the Saudi competition authority

Al Hassan Ghazi Ibrahim Shaker Co. achieved a net profit of SR26 million in the first half of 2022, a 72 percent increase from the first half of last year

Lazurde Co. for Jewelry reported a 22 percent profit rise in the first half of 2022 to SR22.2 million

Saudi Printing and Packaging Co.’s losses narrowed by 91.8 percent to SR2 million during the first half of 2022

Halwani Bros Co. reported a first-half profit decline of 65 percent to SR18 million

Middle East Paper Co.’s board proposed a 33 percent capital raise to SR666 million to support the company’s financial position and growth plans

Watani Iron Steel Co. saw its profit drop 15 percent to SR25 million during the first half of 2022

Calendar

August 15, 2022

Naqi Water Co. will start trading its shares on TASI


Saudi jeweler L’azurde posts 22% profit jump in H1 on strong retail sales

Saudi jeweler L’azurde posts 22% profit jump in H1 on strong retail sales
Updated 38 min 56 sec ago

Saudi jeweler L’azurde posts 22% profit jump in H1 on strong retail sales

Saudi jeweler L’azurde posts 22% profit jump in H1 on strong retail sales

RIYADH: Saudi jeweler L’azurde has reported a 22 percent profit rise in the first half of 2022 on the back of higher retail sales.

It reported a profit of SR22.2 million ($5.9 million) in the first half compared to SR18 million in the same period last year, according to a bourse filing.

The results were helped by higher revenues, higher gross profits, and reduced financing costs.

Saudi retail revenues surged 12.6 percent over the same period last year following the easing of precautionary measures regarding COVID-19.

In Egypt, retail revenues rose 5 percent due to an increase in revenues at the same stores, the opening of new outlets in the past year, and the increase in selling prices to counter the lower exchange rate, it said.


Red Sea International reduces $80m capital to write off accumulated losses 

Red Sea International reduces $80m capital to write off accumulated losses 
Updated 46 min 37 sec ago

Red Sea International reduces $80m capital to write off accumulated losses 

Red Sea International reduces $80m capital to write off accumulated losses 

RIYADH: Red Sea International Co. said its accumulated losses have dropped to zero, following an SR298 million ($80 million) capital reduction.

The Saudi-listed construction firm brought down its capital to SR302 million from SR600 million, by canceling nearly 30 million shares, according to a bourse filing.

The purpose of the transaction was to extinguish accumulated losses, which amounted to almost 58 percent of the capital, or SR346 million, as of June end.

Most recently, Red Sea International reported that its net loss widened by 7 percent to SR67 million in its financial results for the first half of 2022.


Saudi annual inflation rate rises to 2.7% in July driven by high food prices

Saudi annual inflation rate rises to 2.7% in July driven by high food prices
Updated 21 min 36 sec ago

Saudi annual inflation rate rises to 2.7% in July driven by high food prices

Saudi annual inflation rate rises to 2.7% in July driven by high food prices

RIYADH: Saudi Arabia’s annual inflation rate accelerated to 2.7 percent in July, from 2.3 percent in June, according to the recent data released by the General Authority for Statistics, also known as GASTAT.

The uptick in the Consumer Price Index, as it is called in technical terms, is driven by a rise in food and beverage prices, GASTAT added. 

According to the report, food and beverage prices showed an annual increase of 3.9 percent, while meat prices surged by 5.1 percent. 

“Food and beverages prices were the main drivers of the inflation rate in July 2022 due to their high relative importance in the Saudi consumer basket with a weight of 18.8 percent,” said GASTAT. 

Transport prices increased by 3.6 percent, mainly due to the increase in the purchase of motor cars prices which went up by 4.2 percent. 

The GASTAT report further revealed that personal goods and services prices in the Kingdom also increased by 2.1 percent. 

Restaurants and hotels prices increased by 6.3 percent, due to the increase in catering services prices, which went up by 6.5 percent, the report added.