Big Oil Profits – Some Perspective, No Rhetoric

There has been lots of news on ‘excess’ profits lately, but it’s only been about Big Oil.   How evil are they compared to other companies we know?

The table at the bottom of this article ranks 31 companies and provides related financial information.   They are listed by the percentage growth in their ‘normalized income after taxes’ for the most recently reported 5 year period with the highest growth first.   The table includes the company name and their 5 year percentage growth in normalized income.   This is followed by the earnings per share, the actual normalized income after taxes, and total assets for each of the five most recent years.

The chart below displays the 5 year income growth for 30 of the 31 companies detailed in the table.   Apple Computer, at a 5,234 percent increase, is excluded from the chart to allow improved display of the remaining 30.   The company next in line and shown farthest to the left in the chart is Conoco Phillips.

Click on image for full view.

Conoco Phillips not only has relatively high earnings per share for each of the last five years, but also has a significant growth in income of 337% over the same time frame.   This income growth is not anywhere near the improvement at Apple, but it is much greater than Time Warner, next in line at 191%.   Further down the list are Wal-Mart and Exxon Mobil.   The income growth for both of them is less than one fifth that of Conoco’s.   Also, Wal-Mart and Exxon Mobil come in 10th and 12th after other well known companies like Toyota, Walgreens, and Coca-Cola.   Imperial Oil, BP, Total SA, and other oil companies appear even further down the list.

For a little more perspective, I just looked up the income growth for Johnson & Johnson.   It was 69%.   How about Hershey Foods (chocolate)?   Their income grew 76% during the last 5 years.   Home Depot comes in at 94%.   All higher than Exxon Mobil, at 52%, but still nowhere near Conoco Phillips.

To add to this, I checked the growth in my average gasoline cost for the last 5 years. I have had the same car, same home, same office for that time. After discounting for some vacation by car in 2000, the growth in my average gasoline cost for the last 5 years is 59 percent.

For a little more perspective, how do you think earnings for Saudi Aramco, who the oil companies in the chart/table buy their oil from, have grown over time.   Well, in one two year period, they grew 929% to $27.8 billion.   This is according to Saudi Aramco World : Foundations: The Introduction.   That was during the last big oil crunch in the early 70s.   In 2001, their earnings were up to $63 billion, according to International Spotlight: Saudi Arabia.   In 2004, earnings were estimated at $116 billion in Saudi Arabia Country Analysis Brief. That is a growth of 84% in three years. The same report indicated that expected earnings for 2005 are $150 billion. That’s another 30% – in one year.

So, with the exception of Conoco Phillips, shouldn’t everyone be equally upset with all companies that have seen earnings growth that is even higher than Exxon Mobil? This includes Home Depot, Johnson & Johnson, Hershey Foods, Toyota, Walgreens, Coca-Cola.

As stated earlier the table below shows earnings per share.   Notice how varied they are between companies.   One of the factors that changes this ratio is stock splits.   For example, Apple had a 2 for 1 split in the last reported year.   If that had not occurred, their EPS for the last year would have doubled to 3.30. Similarly, when a company buys their shares back and takes them out of trading, the EPS will go up.

The total assets for the companies are listed just to show their relative ‘size’.

Apple Computer — 5,234%
(0.04) 0.13 0.12 0.39 1.65
(26) 88 87 293 1,335
6,021 6,298 6,815 8,050 11,551 — 92%
ConocoPhillips — 332%
3.73 2.75 0.84 3.48 5.94
1,897 1,614 813 4,732 8,200
20,509 35,217 76,836 82,455 92,861 — 352%
Time Warner — 191%
0.53 0.52 0.41 0.76 0.78
1,226 2,284 1,820 3,434 3,568
10,778 208,504 115,518 121,780 123,339 — 1,044%
Archer-Daniels-Midland — 172%
0.58 0.78 0.70 0.76 1.60
383 511 451 495 1,044
14,340 15,379 17,183 19,369 18,598 — 30%
Halliburton — 146%
0.30    1.29    (0.85) 0.71 0.80
152 570 (327) 349 375
10,192 10,966 12,844 15,499 15,796 — 55%
Toyota Motor — 88%
1.53 1.29 1.79 2.90 3.01
4,934 4,646 6,001 9,172 9,275
143,937 163,269 170,434 186,395 205,802 — 43%
Bank of America — 85%
2.39 2.61 3.04 3.63 3.87
7,862 8,325 9,244 10,806 14,539
642,191 621,764 660,951 719,483 1,110,457 — 73%
Walgreens — 75%
0.88 0.99 1.14 1.32 1.53
892 1,008 1,165 1,350 1,560
8,834 9,879 11,657 13,342 ??,???
Berkshire Hathaway — 72%
2,654.75 895.09 2,795.30 5,308.68 4,752.49
4,284 1,420 4,300 8,215 7,367
135,792 162,752 169,544 180,559 188,874 — 39%
Coca-Cola — 68%
1.25 1.57 1.61 1.95 2.14
3,101 3,915 3,976 4,794 5,202
20,834 22,417 24,406 27,342 31,327 — 50%
Wal-Mart — 64%
1.41 1.44 1.77 2.03 2.41
6,424 6,631 8,011 9,075 10,516
78,130 83,527 94,808 105,405 120,223 — 54%
Statoil — 53%
1.26 1.28 1.20 1.45 1.77
2,559 2,728 2,615 3,194 3,911
32,867 30,720 31,602 34,090 38,189 — 16%
Exxon Mobil — 52%
2.39 2.25   1.67   3.16   3.91
16,633 15,471 11,269 20,960 25,330
149,000 143,174 152,644 174,278 195,256 — 31%
Target Stores — 49%
1.40 1.52 1.52 1.78 2.09
1,264 1,368 1,376 1,619 1,885
19,490 24,154 28,603 31,416 32,293 — 66%
Imperial Oil — 46%
2.86 2.64 2.72 3.89 4.89
1,198 1,066 1,032 1,445 1,744
9,554 9,161 10,107 10,483 11,919 — 25%
Microsoft — 45%
0.86 0.69 0.79 0.99 1.23
9,209 7,452 8,475 10,729 13,349
58,830 67,646 81,732 94,368 70,815 — 20%
Citigroup — 36%
2.53 2.67 2.63 3.49 3.32
12,725 13,611 13,529 18,106 17,269
902,210 1,051,450 1,097,590 1,264,032 1,484,101 — 64%
General Mills — 35%
2.37 1.65 2.59 2.86 2.63
656 514 896 998 888
5,091 16,540 18,227 18,448 18,066 — 255%
BP — 31%
0.46 0.19 0.34 0.51 0.75
11,807 6,345 6,204 10,124 15,424
143,938 141,970 159,125 170,662 191,108 — 33%
Kraft Foods — 27%
1.67 1.79 1.97 1.94 1.80
2,435 2,884 3,413 3,358 3,082
52,071 55,798 57,100 59,285 59,928 — 15%
Colgate-Palmolive — 25%
1.81 2.02 2.33 2.60 2.45
1,064 1,147 1,288 1,421 1,327
7,252 6,985 7,087 7,479 8,673 — 20%
McDonald’s — 19%
1.45 1.41 1.14 1.19 1.81
1,918 1,823 1,446 1,508 2,279
21,684 22,535 23,971 25,838 27,838 — 27%
Total SA — 6%
10.38 9.67 11.72 11.94 12.72
7,248 6,662 7,650 7,427 7,686
100,620 104,668 100,803 94,464 144,405 — 44%
Verizon Communication — -15%
3.13 0.30 0.93 1.22 2.62
8,499 812 2,534 3,356 7,261
164,735 170,795 167,468 165,968 165,958 — 1%
Merck — -19%
3.10    3.14    3.01    2.95    2.61
7,141 7,192 6,795 6,590 5,813
40,155 44,021 47,561 40,588 42,573 — 6%
Burlington Northern — -19%
2.38 1.89 2.01 2.11 2.14
980 731 760 777 791
24,375 24,721 25,767 26,947 28,925 — 19%
Union Pacific — -28%
3.42 3.77 5.02 4.15 2.33
842 934 1,265 1,056 604
30,917 31,551 32,764 33,494 34,589 — 12%
Safeway — -55%
2.49 2.77 1.52 0.69 1.26
1,241 1,394 709 304 560
15,965 17,463 16,047 15,097 15,377 — -4%
Kroger — -56%
1.34 1.52 1.58 0.73 0.66
1,101 1,223 1,228 542 485
18,179 19,069 20,318 20,763 20,491 — 13%
General Motors — -59%
7.49 2.36 3.45 5.10 4.97
5,172 1,438 1,694 2,250 2,103
301,129 322,412 369,053 448,507 479,603 — 59%
Bayer — -67%
2.95 1.33 2.12 (2.39) 1.08
2,229 1,163 1,286 (1,632) 726
44,108 44,819 50,450 45,310 45,483 — 3%