reached a milestone in its first-quarter earnings report, aided by rising oil prices and a weakened business model. The company’s cash flow covers dividends and capital expenditures. Just a few months ago, analysts speculated that Exxon may need to cut its dividend.
Exxon (ticker: XOM) on Friday reported adjusted earnings of 65 cents per share, which is nickel ahead of Wall Street forecasts. Revenue of $ 59 billion exceeded expectations of $ 56 billion.
The improvements come shortly. Exxon said last year it would not take on more debt after Moody’s downgraded the issuer and its senior secured. He even stopped contributing to some employees’ retirement plans as he tried to cut operating costs.
Activist investors have pushed Exxon to lose weight faster and move its business more aggressively to a low-carbon future. A fund called Engine No. 1, backed by other investors such as Calpers, is urging Exxon to add four new independent board members, a proposal that the company opposes.
But first-quarter results show a rise in some critical areas that could affect proxy voting. The company’s $ 9.3 billion operating cash flow allowed it to fully finance dividends and capital expenditures while paying off $ 4 billion in debt. The company also says it cut operating costs by $ 3 billion last year and will cut another $ 3 billion this year.
In an interview with To Barron Following the call for profit, CEO Darren Woods said the company was ready to fully fund its dividend, even if oil prices again fluctuated below $ 50 a barrel. Crude Brent crude futures, the international benchmark, traded at $ 67 a barrel on Friday.
“The plans we introduced were based on the relatively low price of crude oil,” Woods said. “What we said is $ 50 a barrel, and as you move below, we can continue to pay the dividend and make the investments we need and start rebalancing.”
Exxon’s dividend yield is 6%. During the crisis, it had jumped above 10%, which could be a warning sign that investors expect a decline.
“We feel very confident, very confident in paying the dividend based on the plans we have,” he added. “What we see today is really confusing.”
In fact, higher oil prices mean that Exxon can weaken its debt burden more quickly. He still has $ 63 billion in debt.
“What we’re doing today with this extra revenue we’re seeing in the market it’s in is just using it to reduce depreciation faster,” Woods said.
Exxon shares fell 1.8 percent to $ 57.90 on Friday.
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