ExxonMobil Corp. (XOM) is planning to increase capacity by 10% at its hydrocarbon fluids plant in Antwerp, Belgium. The expansion is focusing on high performance Exxsol fluids is expected to be completed by mid-2011. Exxon’s chemical portfolio includes Isopar, Solvesso and Exxsol D fluids.
Exxon is the largest worldwide producer of olefins, paraxylene, benzene and polyolefins, and holds leading positions in a variety of other specialty chemicals. The company has been providing its customers with high-quality fluids from manufacturing facilities in the United States, Europe, Asia and Latin America.
The company has been steadily investing toward capacity enhancement of its hydrocarbon fluids plants. It had invested in the same Antwerp plant in 2007 and in the Singapore Chemical Plant in 2008.
Of the three operating segments, Chemicals is an important part of the company’s overall profitability. Approximately 11% of Exxon’s 2009 earnings came from this segment. Notably, this segment has been contributing a substantial portion of the company’s net profit since the last few quarters. The third quarter was not an exception, with strong results being driven by a favorable commodity price environment, improved refinery margins and a solid chemical contribution.
Total third quarter product sales in the Chemicals segment increased 3.2% year over year to $6.56 billion and earnings were $1.23 billion, up 40.3% than the year-earlier earnings. The growth highlights the company’s aggresive expansion of its chemical exposure.
Since the third quarter earnings release, Exxon shares rose approximately 6%. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors seeking a defensive name. Our Neutral recommendation remains unchanged with the Zacks #3 Rank (Hold).
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