2000 Highlights

ExxonMobil's chemical business earned $1.2 billion in 2000, the seventh consecutive year of earnings over $1 billion. However, earnings were down 14 percent versus 1999 as rising feedstock and fuel costs combined with a weakening supply/demand balance to compress petrochemical margins. Advantaged feedstock and fuel flexibility helped ExxonMobil outperform competition in this challenging environment.

Prime product sales volumes reached a record 25.6 million metric tons, up 1 percent versus last year's record level. Revenue of $21.5 billion increased 35 percent from 1999.

Capital expenditures were $1.5 billion as major petrochemical facilities were completed in Saudi Arabia and neared completion in Singapore. By mid-2001, ExxonMobil's global production capacity of four large-volume, growing petrochemicals — ethylene, polyethylene, polypropylene, and paraxylene — will have increased more than 75 percent versus 1996.

Return on average capital employed was 8 percent in 2000. Despite the pre-start-up burden of significant growth investment, ExxonMobil's chemical returns continued to exceed the average of our major petrochemical competitors. Over the current seven-year business cycle, our chemical business achieved an average return of 15 percent.

Five ExxonMobil chemical facilities were recognized as Super STAR Sites by the United States Occupational Safety and Health Administration for achieving superior safety performance, 75-percent better than the average U.S. manufacturing business.

Industry Conditions

• Worldwide primary petrochemical demand growth slowed during 2000. Weakening economic conditions in the second half of the year and end-user inventory reductions were primarily responsible for the lower growth.
  
  
• Petrochemical prices increased in 2000, but failed to keep pace with rapidly rising crude oil and natural gas-based feedstock costs. As a result, commodity margins remained at bottom-of-cycle conditions for most of the company's high-volume petrochemicals. Specialty margins were also compressed by rising feedstock and fuel costs.
  
  
• The petrochemical industry continued to restructure in 2000. Surviving firms are focusing on core businesses, building scale, and extending global reach to enhance competitiveness. ExxonMobil continues to be a leader in this changing landscape.