achieved a significant milestone in its first-quarter earnings report, helped by rising oil costs and a slimmed-down enterprise mannequin. The firm’s money stream lined its dividend and capital expenditures. Just just a few months in the past, analysts had been speculating that Exxon might need to chop its dividend.
Exxon (ticker: XOM) on Friday reported adjusted earnings of 65 cents a share, a nickel forward of Wall Street estimates. Its income of $59 billion outpaced expectations for $56 billion.
The enhancements come within the nick of time. Exxon stated final yr that it wouldn’t take on more debt after Moody’s downgraded its issuer and senior unsecured ratings. It even stopped contributing to some worker retirement plans because it tried to scale back working prices.
Activist buyers have pressured Exxon to slim down sooner and to transition its enterprise extra aggressively to a lower-carbon future. A fund known as Engine No. 1, backed by different buyers like Calpers, is pushing Exxon so as to add 4 new unbiased board members, a proposal the corporate opposes.
But the first-quarter outcomes present an upswing in some vital areas that would have an effect on the proxy vote. The firm’s working money stream of $9.3 billion allowed it to completely fund the dividend and capital bills, whereas additionally paying off $4 billion in debt. The firm additionally says it diminished working bills by $3 billion final yr, and can minimize a further $3 billion this yr.
In an interview with Barron’s after the earnings name, CEO
stated that the corporate was ready to completely fund its dividend even when oil costs swing beneath $50 a barrel once more. On Friday, Brent crude futures, the worldwide benchmark, had been buying and selling at $67 a barrel.
“The plans that we put in place were based on a fairly low crude price,” Woods stated. “What we said is at $50 a barrel, and as you move out below, that we can continue to pay the dividend and make the investments that we need, and begin to rebuild the balance sheet.”
Exxon’s dividend yield is at 6%. During the disaster, it had spiked above 10%, which could be a warning signal that buyers anticipate a minimize.
“We feel very secure, very confident, in paying the dividend based on the plans we’ve got,” he added. “What we’re seeing today is really a lot of upside.”
In reality, greater oil costs imply that Exxon can whittle away at its debt load sooner. It nonetheless has $63 billion in debt.
“What we’re doing today with that additional revenue that we’re seeing with the market where it’s at, is just using that to deleverage more quickly,” Woods stated.
At noon on Friday, Exxon shares had been down 1.8%, to $57.90.
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