Jan. 29, 1998 Mobil Corp. has reported its full year 1997 operating earnings were a record $ 3,430 mm, up $ 333 mm, or 11 %, from last year. Including special items, full year net income was $ 3,272 mm, versus $ 2,964 mm last year.
In comparing 1997 operating earnings with 1996, Chairman and CEO Lucio A. Noto said, "I am pleased to announce this is the third consecutive year of record operating results, and a year in which we made considerable progress toward achieving our long-term goals of $ 5 billion in earnings by 2001 and averaging a 14 % return on capital employed. The increase in earnings was primarily due to self-help which netted over $ 200 mm, including volume growth in all segments of the business, improved performance, benefits from recently formed alliances and expense reduction programs. The balance was due to a net improvement in industry fundamentals. "
Noto continued, " Mobil's recently announced 1998 investment spending budget of $ 5.9 bn is up about 13 % from estimated 1997 spending of $ 5.2 bn, reflecting our excellent portfolio of attractive opportunities, our strong balance sheet and confidence in the future of our business. In the upstream, earnings exceeded last year's record, primarily due to a 4 % increase in world-wide production. Not only did we grow production, but new reserve additions replaced 146 % of this higher production level at a very competitive cost. In the International area, we are now starting to realise the benefits from our programs for growth in Nigeria, Equatorial Guinea, Kazakhstan, South America and Qatar. In the U.S., after experiencing declines for a number of years, production in the fourth quarter of 1997 was essentially flat with the comparable period in 1996."
"Downstream, Mobil's U.S. marketing and refining business also achieved record earnings, reflecting improved margins and strong performance including higher sales volumes. Initiatives in marketing such as Speedpass(TM) and On The Run(SM) contributed to this growth. In International downstream, earnings were up in Europe as a result of higher margins and the benefits of our alliance with BP. Asia-Pacific held up fairly well despite the turmoil in the region; however, margins have not yet recovered from the depressed levels experienced late in the third quarter. In response to this, we have accelerated the pace of initiatives to improve the profitability of our business in the region, building on the strong position we already have. In this regard, we announced a restructuring in Japan in the third quarter and have initiated a restructuring of our Australian marketing operations."
"Chemical earnings improved by over 14 %, reflecting higher volumes in all sectors of the business, higher polyethylene margins and improved plant performance."
Noto concluded, "Crude oil prices have weakened significantly in the first quarter of 1998. Business fundamentals, as reflected by this recent price decline, continue to be unpredictable in the near term. Additionally, the recent events in Asia-Pacific are impacting world-wide supply/demand balances for crude oil, products and petrochemicals. Despite these events, we remain convinced that this is a growth area for the future. We have first class facilities in Asia-Pacific and are focusing on improving their efficiencies. In addition, we will be alert to attractive opportunities for new investment."
Full year 1997 net income was $ 3,272 mm, $ 308 mm higher than the $ 2,964 mm earned in 1996. Net special charges in 1997 totalled $ 158 mm, mainly for restructuring-related charges in International downstream, partly offset by gains on asset sales and other items. Net income in 1996 included $ 133 mm of net special charges, mainly for restructurings, partly offset by gains on asset sales and favourable inventory adjustments.