Texaco Inc. and Gulf Oil Corp., two of the nation's five largest petroleum companies, yesterday reported substantial increases in profitability during 1979.
Earnings of Texaco, a company whose performance was depressed for a long period starting in the mid-1970s, leaped 106.4 percent for the year. Gulf's profits increased 68 percent. Fourth-quarter profit gains were more modest, because of a sudden increase in crude oil prices.
Both companies emphasized their views -- in lengthy press statements -- that the level of profitability achieved last year represented a return to profit performances that are average for American industry.
The 1979 gains are not "unreasonable or obscene," said Gulf Oil Chairman Jerry McAfee. "I am proud of our performance, but it must be considered in the context of what other companies earned."
Added Texaco Chairman Maurice Granville: "If the company is to play its part in satisfying future energy demand, it must have earnings high enough to support its enormous requirements for capital investment. . . . Texaco's earnings in 1979 have shown a strong recovery from the relatively low levels of the recent past."
Texaco, which noted yesterday that its dividends paid to stockholders had declined to 33 percent of profits in 1979 from 64 percent the previous year, also boosted its dividend rate yesterday. Separately, Standard Oil Co. of Ohio announced a dividend increase and Standard Oil Co. of Indiana had taken a similar step earlier in the week, reflecting the record 1979 earnings that the oil industry is now reporting.
For Texaco, the third-largest U.S. oil firm, earnings last year totaled $1.76 billion ($6.48 a share) compared with $852 million ($3.14) in 1978, as revenues soared $10 billion to $39.1 billion.
In the fourth-quarter, profits rose 62.7 percent to $534 million ($1.97 a share) from $328 million ($1.21) and revenues jumped to $12 billion from $8.3 billion.
Granville emphasized that a reorganization in his company, after a troubled period for Texaco several years ago, had contributed to the rebound in profitability. Annual profits remained in a range of $810 million to $890 million from 1975 through 1978 and represented a low return on investment. $8
In terms of return on stockholder's equity, Texaco's profitability last year was 17.7 percent compared with a 16.7 percent average for U.S. industry. yNet income in 1979 was 4.5 percent of sales vs. 5.8 percent for all manufacturing companies.
Expansion and exploration spending for Texaco last year totaled $2 billion, including more than $1 billion in this country. Profits from operations outside the U.S. last year were $1.08 billion while U.S. profits were $674 million, an increase of 62 percent.
Texaco's directors voted an increased payout of 60 cents a share, up from 54 cents, starting with a March 10 payment to owners of record Feb. 5.
Gulf reported 1979 profits of $1.32 billion ($6.78 a share) compared with $785 million ($4.03) in 1978 as sales jumped 30 percent to $26.1 billion for the country's fifth-largest oil firm. Fourth-quarter profits rose 54 percent to $366 million ($1.88) from $237 million ($1.22) as sales gained 42 percent to $7.7 billion -- a rate of volume increase that partially reflects inflated oil prices.
"Because we deal in big numbers, they are subject to misinterpretation," said Gulf's McAfee yesterday. But the 1979 gains, he insisted, came after four years of "virtually flat" profits.
On each gallon of refined products saold in the U.S. last year, Gulf profits were 2.7 cents compared with 2 cents the previous year, the Gulf executive added. Return on equity rose to 16.3 percent from 10.5 percent in 1978 for what McAfee said represents "the first time in several years that we have received a fair return on our efforts," including $11 billion of capital and exploration spending in the last five years.
In 1979, Gulf spending totaled $2.5 billion compared with $2.1 billion the previous year; two-thirds of the spending last year was in the U.S. and 78 percent of that amount was devoted to energy exploration and production projects.
Ashland Oil, the 16th-largest U.S. firm, reported separately yesterday that earnings in its first fiscal quarter ended Dec. 31 rose to $76 million ($2.44 a share) from $51 million ($1.33).
Standard Oil of Ohio's dividend will be boosted to 50 cents a share from 40 cents, starting March 10 for owners of record Feb. 15.