Chevron posts record profit

SAN RAMON, Calif. — Chevron Corp.’s quarterly profit surpassed $5 billion for the first time, putting an exclamation point on the oil industry’s latest earnings bonanza.

Topped off by the record results released Friday by Chevron, five of the world’s largest oil companies produced a combined net income of $31.6 billion during the three months ended in September.

None of the brethren grew faster than San Ramon-based Chevron, whose third-quarter profit rose 40 percent from last year. It marked the third time in the past year that its quarterly results have hit a new high.

Exxon Mobil Corp., the world’s largest publicly traded oil company, fared the best in terms of sheer earnings power, with a third-quarter profit of $10.5 billion — the second highest in its history.

This might be as good as it gets, for the near term at least, now that crude oil prices are hovering around $60 per barrel, down from a peak of $78.40 in mid-July.

“As far as record earnings are concerned, the game is over,” Oppenheimer & Co. analyst Fadel Gheit said.

The moneymaking formula followed a familiar pattern as the industry benefited from lofty oil prices and wide profit margins at the gasoline pumps, a factor that may once again turn up the heat on an industry that has been fending off accusations of price-gouging for the better part of two years.

Rep. Edward Markey, D-Mass., renewed his criticism of the oil industry Friday with a Halloween analogy. “Chevron’s latest earnings reports may be a treat for their shareholders, but they’re a dirty trick for American consumers,” he said.

Chevron, in particular, is especially sensitive about attacks on its huge profits right now because Californians are preparing to vote on initiative, Proposition 87, that would impose a special tax of up to 6 percent tax on oil produced in the state to finance alternative fuel research.

As California’s largest oil company, Chevron has been spending heavily to defeat the proposed measure, arguing that it would drive up gas prices. The initiative’s backers, including former President Bill Clinton, are touting the tax a way to lessen California’s dependence on foreign oil.

Chevron is bracing for a $200 million pretax hit on its annual earnings if the measure passes in the Nov. 7 election, Chief Financial Officer Steve Crowe told analysts during a Friday conference call.

Like other oil companies, Chevron maintains it has little control over worldwide oil prices that are affected by everything from terrorism threats to shifting weather forecasts.

The oil industry also likes to point out that its profit, as a percentage of total revenue, is much lower than many other sectors, including high-tech and finance.

As an example, Chevron made a $9.25 profit on every $100 in revenue during the third quarter. Google Inc. generated a profit of $27.27 on every $100 of its third-quarter revenue, even though it doesn’t charge consumers to use its Internet-leading search engine.

Chevron’s third-quarter earnings of $5.02 billion, or $2.29 per share, compared with net income of $3.59 billion, or $1.64 per share, at the same time last year.

Chevron boosted its earnings despite a slight decline in its revenue, which totaled $54.2 billion. That was down from $54.5 billion last year.

The performance topped the average estimate of $2.03 per share among analysts surveyed by Thomson Financial, helping to lift Chevron shares 18 cents to close at $67.68 on the New York Stock Exchange.

While more productive refineries contributed to Chevron’s upturn, Gheit said the company reaped its biggest gains at the gasoline pumps.

“Brunswick Corp., which makes boats, bowling gear, and other leisure products, said Friday its profit slid in the third quarter on slow U.S. sales of boats and engines.

Lake Forest-based Brunswick reported third-quarter earnings of $36.5 million, or 39 cents a share. That’s down from earnings of $88.4 million, or 89 cents a share, in the prior third quarter.

On a continuing operations basis, the company posted a profit of $50.4 million, or 54 cents a share, in the latest quarter.

Brunswick said the latest results from continuing operations included a tax benefit of 6 cents a share.

“Avon Products Inc. reported a 47 percent drop in third-quarter profit on Friday as it struggled with higher ad spending, costs for restructuring its inventory and a charge related to a tax dispute resolution in Britain.

The New York-based direct seller of beauty products said that profit fell to $86.4 million, or 19 cents per share, in the three months ended Sept. 30 from $163.8 million, or 35 cents per share, during the year-ago period.

Revenue rose 9 percent to $2.06 billion from $1.89 billion last year, with beauty products sales up 10 percent, including a 16 percent increase in skin-care sales.

Analysts polled by Thomson Financial had predicted revenue of $1.99 billion.