Mark:
First of all, I know exactly what many of the oil companies are making, along with numerous other companies I follow as a minor hobby, and to see how U.S. industry is doing. Since these companies are publicly traded, they have to publish their results, which then become public knowledge.
You are right about Exxon’s gross profit. Since Exxon is the world’s largest publicly traded oil company, one would expect that their gross profit would be among the largest of all U.S. corporations. Making a profit is what businesses try to do.
But gross profit isn’t a prime indicator of how a company is doing and doesn’t have anything to do with whether a company is ‘profiteering.’ The real question is how is their income vs their out go. A prime indicator of this is a company’s “gross profit margin.” This is the revenue (income) minus cost of goods sold, divided by revenue, expressed as a percentage. Exxon’s gross profit margin for the past 12 months is 39.4%.
Another important indicator is the “pre-tax profit margin,” which is the pre-tax earnings from continuing operations, divided by revenue, expressed as a percentage. For the past 12 months, Exxon’s pre-tax profit margin is 16.9%.
As a comparison, here are the gross profit margins and pre-tax profit margins (shown in the format “gross profit margin / pre-tax profit margin”) of a few publicly traded U.S. companies, in descending order:
Microsoft: 84.2% / 39.4%
AT&T: 61.5% / 16.9%
General Electric: 56.1% / 14.4%
Union Pacific: 55.6% / 18.5%
Exxon: 39.4% / 16.9%
Apple Computer: 35.5% / 21.2%
Chevron Oil: 24.9% / 14.6%
Boeing Aircraft: 21.8% / 9.5%
Ford Motor: 21.2% / -7.8%
General Motors: 7.0% / -13.9%
So if any ‘industry group’ of companies look to be ‘profiteering,’ it would seem to be the “damned” (your word) large computer, electronics and communications companies. Exxon is in a somewhat distant fifth place, just in the small group of companies I listed.
As I have written before, the oil companies just aren’t the villains they are made out to be. You may not like that, but if you want to attack a company for high profit margins, why not go after Microsoft for their 84.2% gross profit margin, or AT&T, 61.5% gross profit margin. Just look at Union Pacific’s 55.6% gross profit margin! Outrageous to some, but the engines of our economy to educated folks.
BTW, I ran a small high technology manufacturing company from the early 1990s until a couple of years ago. Our target for gross profit margin was 50%. We thought anything over ~35% was acceptable, and actually made better than that in several good years. Even so, we went bankrupt, mostly due to overseas (Asian) competition and a general lack of sales in our industry.
Happy RRing,
Jerry
