Exxon Mobil reports 3Q results Thursday

NEW YORK (AP) — Exxon Mobil Corp. reports third-quarter earnings on Thursday, and analysts expect earnings per share will be lower than a year ago.

In the second quarter, Exxon produced less oil and gas and sold it at lower prices than in the same period last year, although the sale of assets allowed it to boast a 49 percent increase in net income.

Exxon is known for disciplined investing, and it expects demand for oil to grow over the long term. The company, which made a big bet on natural gas with the 2010 acquisition of XTO Energy, agreed last month to spend $ 1.6 billion to increase its U.S. oil holdings.

Dahlman Rose & Co. analyst Asit Sen said Exxon has a strong portfolio of big projects around the world, giving it a diverse and impressive resource base. But production growth “has been uninspiring,” Sen said in a note this month, while projecting that production will rise an average 2 percent to 3 percent per year from 2014 through 2017.

Exxon’s shares rose 7 percent during the third quarter and through Tuesday were up 7 percent for the year.

WHAT’S EXPECTED: Analysts surveyed by FactSet expect earnings of $ 1.95 per share, excluding special gains and charges, on revenue of $ 112.4 million.

LAST YEAR’S QUARTER: The Irving, Texas-based company reported net income of $ 10.33 billion, or $ 2.13 per share, in the third quarter of 2011. Revenue jumped 32 percent to $ 125.3 billion on higher oil prices.

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Ford reports $1.63b 3Q profit despite Europe woes

DEARBORN, Mich. (AP) — Europe may have lost its appetite for new cars, but buyers in America and China propelled Ford to a better-than-expected profit in the third quarter.

Ford Motor Co. earned $ 1.63 billion, down only slightly from a year earlier, despite lower worldwide sales and bigger European losses. It was the company’s best performance ever in the third quarter.

Ford said Tuesday its per-share net income was unchanged at 41 cents. Excluding one-time items, like severance payouts, Ford earned 40 cents per share, beating Wall Street’s forecast of 30 cents, according to FactSet.

Ford reported a $ 2.3 billion pretax profit in North America, its best performance since the company began reporting separate North American results 12 years ago. The region has been profitable for three years now, after a grueling restructuring that saw thousands of job cuts, plant closures and the accelerated development of new products like the Focus sedan. That restructuring is now Ford’s blueprint for Europe, which is expected to drag down results this year and next.

“We know what it takes to have a healthy business,” Chief Financial Officer Bob Shanks said.

Ford’s revenue fell 3 percent to $ 32.1 billion as vehicle sales dropped worldwide, but the company still exceeded Wall Street’s revenue forecast. That was due to North America, where revenue jumped 8 percent to $ 19.5 billion, helped by higher pricing and increased sales of more profitable trucks and SUVs like the Ford Explorer.

It was the third quarter in a row that the company has made more than $ 2 billion in North America and has reported an operating margin of 10 percent or more. Ford’s North American operating margin was 12 percent in the third quarter.

“To me the story isn’t just the results but the consistency of the results,” Shanks said.

It’s also impressive because the third quarter is typically a slower period. Summer production shutdowns cut into profits, while fall launches of new cars can hurt sales of older cars still in showrooms.

Shanks said the 12-percent rate likely won’t be repeated in the fourth quarter, when automakers typically spend more on holiday ads. Ford also saw a gain from commodity hedging that might not be repeated.

Ford’s U.S. market share actually fell from a year earlier. Japanese automakers regained their footing after the 2011 earthquake and Ford stopped selling the Ranger pickup and Crown Victoria sedan which had strong sales last fall. Shanks said Ford is optimistic that its share will grow in the fourth quarter, as new versions of the Fusion sedan and Escape small SUV arrive at dealerships. But he said Ford won’t go back to its old habit of gaining share by heavily discounting its vehicles or dumping them into rental-car fleets.

North American sales were up 3 percent. But more importantly, Ford made more money on every vehicle it sold as customers paid more for features like inflatable seatbelts. The company also spent less on incentives. Car buying site TrueCar.com said U.S. buyers paid an average of $ 32,115 for a new Ford in the third quarter, up more than $ 300 from the same time last year.

The company lost $ 468 million in Europe, where sales have fallen sharply because of the troubled economy. Ford’s European sales were down nearly 15 percent in September compared with a year earlier, worse than the 10.8 percent drop for all brands, according to Acea, the European carmakers’ association. Shanks said Ford is losing market share because it’s not matching competitors’ aggressive incentives in Europe.

The company hopes to stem its losses by introducing 15 new vehicles to Europe over the next five years, including the iconic Mustang sports car. It also announced last week that it plans to close three European factories by 2014, affecting 6,200 employees. In the meantime, the company expects to lose more than $ 1.5 billion both this year and next year in Europe. It doesn’t expect to return to profitability in the region until the middle of the decade.

Jefferies auto analyst Peter Nesvold said Ford’s impressive results in North America bode well for Europe.

“One has to believe the shares have tremendous upside if the company comes even close to replicating that success in Europe,” said Nesvold, who has a “Buy” rating on Ford shares.

The shares closed at $ 10.36 Friday. Trading was suspended Monday and Tuesday because of a massive storm on the East Coast.

Ford earned $ 45 million in its Asia Pacific region, reversing a loss from a year earlier. It’s the first profit there since the second quarter of 2011.

Shanks said a big investment in new plants and products for Asia is paying off. Ford reached its highest-ever market share in China in the third quarter, at 3.6 percent. That was up from 2.8 percent a year earlier.

Sales of the Focus small car are now higher in Ford’s Asia Pacific region than in the U.S. or Europe. Ford sold 86,000 Focus sedans in Asia Pacific in the third quarter, up 79 percent from last year. By comparison, North American Focus sales were up 30 percent to 65,000 and European sales were down 18 percent to 74,000.

Ford made $ 9 million in South America in the third quarter, down $ 267 million from last year, as it phased out some older products and was hit by unfavorable exchange rates.

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Anadarko Reports Mixed 3Q

Anadarko Petroleum Corporation (APC) posted net earnings from continuing operations of 84 cents per share for the third quarter of 2012, surpassing the Zacks Consensus Estimate of 76 cents and the prior-year figure of 66 cents per share.

On a GAAP basis, Anadarko reported earnings of 24 cents per share in the third quarter versus a loss of $ 6.12 per share in the year-ago quarter. The difference between operating and GAAP earnings during the quarter was due to the impact of certain one-time items, charges and gains, during the quarter.

Numbering among the charges were a 58 cent loss from derivatives, 1 cent for impairments, 1 cent for Algeria profit tax settlement, 1 cent related to accelerated depreciation of Gulf of Mexico assets and a gain of 1 cent from divestiture.


Revenue of $ 3.3 billion in the quarter missed the Zacks Consensus Estimate of $ 3.42 billion but surpassed the year-ago figure of $ 3.19 billion.

The year-over-year growth in revenue was mainly due to a 13.5% increase in oil and condensate sales from the prior-year quarter, which covered up the slackness in sales from natural gas and natural gas liquids.

Operational Highlights

Sales volumes in the quarter improved 11.4% to 68 million barrels of oil equivalent (:MMBOE) or 739 thousand barrels of oil equivalent per day (MBOE/d) from 61 MMBOE or 660 MBOE/d in the year-ago quarter. The year-over-year rise was mainly due to higher oil and condensate sales volumes.  

Liquids sales averaged 234 thousand barrels per day (MBbl/d), up 13% year over year. The increase was driven by ramped up activities in Anadarko’s Wattenberg HZ program in northeast Colorado and in the Eagleford Shale in South Texas.

Realized prices for crude oil and condensate, natural gas and NGL averaged $ 99.793 per barrel (up 0.01%), $ 2.67 per thousand cubic feet (down 32.1%) and $ 35.93 per barrel (down 35.2%), respectively, in the reported quarter.

Exploration costs during the quarter were $ 297 million versus $ 307 million in the prior-year quarter. A major portion of the exploration cost comprises of the dry hole expenses, which amounted to $ 142 million in the reported quarter.

Interest expense during the quarter was $ 185 million, lower than $ 206 million in the year-ago quarter.


The company continues to have a strong cash position. Cash and cash equivalents as of September 30, 2012, were $ 2.53 billion versus $ 2.69 billion as of December 31, 2011.

Long-term debt of the company as of September 30, 2012 was $ 13.10 billion versus $ 15.06 billion as of December 31, 2011.

Cash flow from operations in the third quarter of 2012 was $ 2.22 billion versus $ 1.46 billion in the year-ago quarter.

Capital expenditure during the quarter was $ 1.8 billion, increasing from $ 1.3 billion in the third quarter of 2011.  


The strong performance in the first nine months of the year prompted the company to revise its full year sales expectation. Anadarko increased its 2012 sales expectation to 265–267 MMBOE from the prior range of 261–265 MMBOE.

Marketing and gathering margins for the fourth quarter and full year 2012 are expected to be in the band of $ 40–$ 50 million and $ 175–$ 185 million, respectively.

Minerals and Others for the fourth quarter and full year 2012 are expected to be in the band of $ 30–$ 40 million and $ 160–$ 170 million, respectively.

General and administrative expenses for the fourth quarter and full year 2012 are expected to be in the band of $ 290–$ 310 million and $ 1.11–$ 1.13 billion, respectively.

Capital expenditure of the company for the fourth quarter and full year 2012 is expected to be in the range of $ 1.6–$ 1.9 billion and $ 6.6–$ 6.9 billion, respectively.

Peer Comparison

ConocoPhillips (COP), which competes with Anadarko Petroleum, announced operating earnings of $ 1.44 per share for the third quarter 2012, which surpassed the Zacks Consensus Estimate of $ 1.19 per share. The reported figure was also up by almost 2.9% from the year-earlier profit of $ 1.40, reflecting higher-than-expected production of crude oil from its high-margin areas like the Eagle Ford and Bakken.

Revenues in the reported quarter decreased to $ 15.08 billion from the year-ago level of $ 16.69 billion. However, the reported figure comfortably surpassed our projection of $ 11.11 billion.

Our View

Despite the expansion in volumes year over year, the results this quarter were hurt by lower realized prices of the products sold. Due to lower realized prices of natural gas and natural gas liquids, the company’s top-line results fell short of our expectation.

The Mozambique discovering, with initial appraisal drilling suggesting recoverable natural gas of 15 to 35 trillion cubic feet, is encouraging for the company’s future growth. We believe this reserve once developed can cater to the growing demand from the eastern Asian countries and a part of Europe.

Based in The Woodlands, Texas, Anadarko Petroleum is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and NGLs. The company presently retains a short-term Zacks #3 Rank, (Hold rating). With a market capitalization of $ 33.22 billion, the company has 4,800 full time employees.

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Honda reports jump in profit, lowers forecasts

TOKYO (AP) — Honda is reporting a 36 percent surge in net profit for the fiscal second quarter as Japanese automakers bounce back from the tsunami disaster in northeastern Japan the previous year.

Honda Motor Co. said Monday it raked in an 82.2 billion yen ($ 1 billion) profit for the July-September period as sales jumped 20 percent to 2.27 trillion yen. Honda had been hit hard by the March 2011 quake and tsunami disaster that disrupted supply chains.

But the Tokyo-based manufacturer of the Accord sedan, Fit compact and Asimo humanoid robot lowered its forecasts for the fiscal year through March 2013, because of the recent sales drop in China over a territorial dispute that has set off violent protests in some parts of China and a call to boycott Japanese goods.

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Arch Coal reports sharply higher 3Q earnings

ST. LOUIS (AP) — Arch Coal Inc. says its cost-cutting efforts helped boost third-quarter earnings, which were well above Wall Street expectations.

St. Louis-based Arch says net income totaled $ 45.8 million, or 22 cents per share, in the July-September period. That compares with $ 8.9 million, or 4 cents per share, a year earlier.

Adjusted income totaled $ 41.8 million, or 20 cents per share, compared with $ 7.4 million, or 3 cents per share, a year earlier.

Revenue fell 9 percent to $ 1.09 billion.

On average, analysts polled by FactSet expected Arch to report an adjusted loss of 15 cents on revenue of $ 1.02 billion.

Arch’s president and CEO, John Eaves, says the company believes the global coal markets are correcting.

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