Exxon Mobil expects refining profits to decline in the second quarter due to the industry-wide decline in profit margins, leading to a downward revision of earnings expectations.
ExxonMobil (XOM.US) is expected to lower its refining profit in the second quarter due to the decline in industry-wide profit margins, according to Zhītōng Cáijīng. The company said in a statement on Monday that its refining revenue in the second quarter will fall by $1.1 billion to $1.5 billion compared to the first three months. The segment recorded a profit of $1.4 billion in the first quarter.
Refinery business setback means that the overall implied EPS is "below market expectations," wrote Biraj Borkhataria, a capital markets analyst at Royal Bank of Canada. He said ExxonMobil's statement suggested a net income of about $8.3 billion, but that the company often exceeded expectations. Analysts had previously expected a net income of about $10 billion.
Exxon Mobil said gains from rising oil prices of up to $700 million could fully offset losses from falling natural gas prices. ExxonMobil is the first oil giant to release earnings guidance for the second quarter, often seen as a barometer for the industry.