Chevron swings to a £6.32 billion loss in the fiscal second quarter

on Jul 31, 2020
  • Chevron swings to a £6.32 billion loss in the fiscal second quarter.
  • The U.S. oil major misses analysts' estimates for earnings and revenue.
  • Chevron expects COVID-19 to weigh on its financial performance in Q3.

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Chevron Corporation (NYSE: CVX) revealed to have swung to a net loss of £6.32 billion in the fiscal second quarter on Friday. The company attributed the decline to the Coronavirus pandemic that weighed on demand and contributed to the historic plunge in global oil prices in recent months. Chevron became the first major energy firm earlier this week to enter the Israeli market.

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Shares of the company opened about 3% down on Friday. At £63.23 per share, Chevron is currently more than 30% down year to date in the stock market after recovering from an even lower £41.26 per share in March when the impact of COVID-19 was at its peak. Learn more about why how do people make money on the stock market.

Chevron’s Q2 financial results versus analysts’ estimates

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According to Refinitiv, experts had forecast the company to print £16.82 billion in revenue in the second quarter. Their estimate for loss per share was capped at 70 pence. In its report on Friday, Chevron fell shy of both estimates posting a much lower £10.27 billion in revenue and a much higher £1.21 of adjusted loss per share in Q2.  

In the comparable quarter of last year, the U.S. oil major had recorded £27.64 billion in revenue and £1.73 of earnings per share.

The San Ramon-based company valued its net noncash charges in Q2 at £3.96 billion including a write-down of £1.37 billion ascribed to the weaker commodity price outlook and an additional impairment of £1.98 billion attributed to its investment in Venezuela. Chevron also said that it faced other expenses of £593.59 million related to job cuts.

The American multinational energy corporation warned on Friday that the COVID-19 uncertainty is expected to weigh on its financial performance in the third quarter as well.

CEO Michael Wirth’s comments on Friday

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According to CEO Michael Wirth of Chevron:

“The past few months have presented unique challenges. The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices. Given the uncertainties associated with economic recovery, and ample oil and gas supplies, we made a downward revision to our commodity price outlook.”

In an announced earlier in July, the U.S. oil giant expressed plans of acquiring Novel Energy (independent producer of oil and gas).

At the time of writing, the American multinational oil company is valued at £118.12 billion and has a price to earnings ratio of 41.17.

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