ExxonMobil has lost the gold-plated credit rating it had held since the Great Depression.
On Tuesday, Standard & Poor’s stripped ExxonMobil of its highest AAA measure of creditworthiness, cutting it to AA-plus. It’s a defeat for the energy giant, which sought to retain the rating after S&P placed it on notice in February. Before the downgrade, ExxonMobil shared the distinction with just two other companies: Johnson & Johnson and Microsoft.
“Nothing has changed in terms of the company’s financial philosophy or prudent management of its balance sheet,” Scott Silvestri, a company spokesman, said in an e-mail. “ExxonMobil places a high value on its strong credit position and continues to be focused on creating long-term shareholder value despite near-term market volatility.”
The downgrade is a blow to Rex Tillerson, chairman and chief executive, as he approaches mandatory retirement age next year.
S&P questioned ExxonMobil’s decision to spend $54 billion on stock buybacks since 2012 even as its debt load swelled. The company’s preference for returning cash to shareholders may be hurting its ability to stockpile cash and pay down debt, the rating firm said.
“The company’s debt level has more than doubled in recent years, reflecting high capital spending on major projects in a high commodity price environment and dividends and share repurchases that substantially exceeded internally generated cash flow,” S&P wrote in the note.
ExxonMobil also is facing challenges finding new discoveries to replace the crude it’s pumping from the ground, S&P said. Exxon found only enough new oil last year to replace 67 percent of production.
— Bloomberg News
Chobani says it is giving its employees an ownership stake in the privately held company.
The Greek yogurt maker says the shares being distributed would amount to 10 percent of the company’s future value in the event of a sale or initial public offering. It says each of its 2,000 full-time employees will receive shares based on their role and time spent with the company.
Chobani says chief executive and founder Hamdi Ulukaya is meeting with employees this week to discuss the plan.
“This isn’t a gift. It’s a mutual promise to work together with a shared purpose and responsibility,” Ulukaya wrote in a letter to employees. The plans were first reported by The New York Times.
— Associated Press
● ● ● Chipotle posted its first quarterly loss as a public company as it fights to win back diners with free burritos following a series of food scares. The Mexican food chain says sales fell 29.7 percent at established locations in the first three months of the year. Chipotle is trying to bounce back after an E. coli outbreak and norovirus cases that have sent sales plunging. For the first quarter, Chipotle Mexican Grill Inc. lost $26.4 million, or 88 cents per share. Analysts expected a loss of 98 cents per share, according to FactSet. Total revenue fell to $834.5 million. Wall Street expected sales of $867.8 million.
● AT&T reported a better-than-expected quarterly profit, helped by the acquisition of DirectTV. The No. 2 U.S. wireless carrier added 328,000 DirectTV subscribers; FactSet StreetAccount said the average analyst estimate was 222,000. AT&T lost 382,000 customers at its Internet and TV service U-verse. The company also lost 4,000 net wireless postpaid customers in the first quarter, which ended March 31. Net income rose to $3.8 billion in the first quarter ended March 31, from $3.26 billion. Net income fell to 61 cents from 63 cents per share.
● U.S. home prices continued a steady upward march in February. The Standard & Poor’s/Case-Shiller 20-city home price index rose 5.4 percent that month compared with a year earlier. That’s down slightly from January’s 5.7 percent rise. Prices are rising even as sales have leveled off in recent months. The number of homes for sale last month was 1.5 percent lower than a year earlier.
● Orders to U.S. factories for durable goods rose in March. Orders for durable goods increased 0.8 percent, rebounding some from a 3.1 percent tumble in February, the Commerce Department reported Tuesday. The result was fueled by a jump in demand for military equipment, a volatile category. Demand in a category that serves as a proxy for business investment plans was flat in March after dropping 2.7 percent in February.
● Consumer confidence retreated in April. The Conference Board’s sentiment index fell to 94.2 this month from a revised 96.1 in March, the private research group said Tuesday. Sentiment has remained subdued as Americans digest election-year uncertainty and financial markets that are shaking off turbulence caused by concerns about the global economy.
— From news services
● 10 a.m.: National Association of Realtors releases pending home sales index for March.
● 2 p.m.: Federal Reserve policymakers meet to set interest rates, release statement.
● Earnings: Anthem, Boeing, Comcast, Facebook.
— From news services