Net income at Exxon Mobil, the largest oil company in the U.S., dropped to $3.95 billion, or 81 cents a share, from $11.7 billion, or $2.22 a share a year earlier, the Irving, Texas-based company said.
The profit came in below the $1.02 a share analysts polled by Thomson Reuters had expected, and represents the weakest earnings for Exxon since the third quarter of 2003. Shares fell less than a percentage point to $71.31 in midday training on the New York Stock Exchange.
“Global economic conditions continue to impact the energy industry both in the volatility of commodity prices and reduced demand for products,” chairman Rex W. Tillerson said in a statement.
“They’ve been slapped in the face by the economy,” Paul Sutherland, president of Financial & Investment Group in Traverse City, Mich., told Bloomberg News. “The economy fell off a cliff over the last 12 months, and that’s had an obvious impact on oil demand.”
Energy companies such as Exxon have been hurt by the sharp drop in the cost of oil since last July, when the commodity closed at a record high of $145.29. Since then, oil prices have fallen more than 50 percent, to around $67 a barrel.
In January, Exxon Mobil reported that its 2008 profit of $45.2 billion broke the annual record it set for a U.S. company, even after its fourth quarter earnings fell by a third.
Exxon’s second-quarter figures are only the latest in what has since been a lackluster quarter by the standards of the energy industry. Royal Shell Plc, Europe’s largest oil company, earlier Thursday reported a 67 percent decline in second-quarter profit, to $3.8 billion. ConocoPhillips, the third-largest U.S. oil company, saw its profits fall 76 percent, to $1.3 billion.
Compounding matters for the oil industry is falling demand. In the U.S. alone, demand has fallen 3.5 percent in the last year, according to the International Energy Agency in Paris. Globally, the recession is expected to reduce worldwide oil consumption for a second consecutive year, the first time that has happened since the early 1980s, according to the New York Times. Consumption is not expected to return to 2008 levels until 2011, according to projections from the International Energy Agency.