Chevron's gross profit appears to be stabilizing in 2024, despite some fluctuations and challenges.
- Gross Profit Stabilization: Chevron's gross profit for the fourth quarter of 2024 (Q4 2024) was $83.59 billion1. This indicates a strong financial performance, which is a positive sign for stabilization.
CVX Gross Profit, Gross Profit YoY
- Challenges to Stability:
- In Q3 2024, Chevron reported a decrease in earnings, citing lower margins on refined product sales, lower realizations, and the absence of prior year favorable tax items as primary reasons2. This suggests that while gross profit may be stabilizing, there are factors that could potentially impact profitability.
- For the full year 2024, Chevron's adjusted EPS fell by more than 23% due to lower margins on refined product sales, lower realized prices, and severance payments3. This decline in EPS could be a concern if it were to continue, but it is important to note that gross profit specifically refers to the gross margin of revenues after cost of sales, so it may not be directly affected by these factors in the same way as EPS.
- In Q4 2024, Chevron's adjusted EPS was $2.06, which was slightly below the forecasted $2.114. This slight miss in EPS could indicate underlying cost pressures or market volatility affecting the bottom line, but again, it may not necessarily reflect the trend in gross profit.
- Positive Factors for Stability:
- Despite the earnings decline in Q3 2024, Chevron's cash flow from operations remained consistent with the previous year, supported by higher dividends from equity affiliates and favorable working capital effects2. This resilience in cash flow is a positive indicator for overall financial stability.
- Chevron has outlined a plan for significant cost cuts, targeting $2 billion–$3 billion in structural cost savings by the end of 20262. Such initiatives can help stabilize gross profit by reducing expenses and improving margins.
- The company has also continued to prioritize shareholder returns, disbursing a record $7.7 billion in cash during the quarter, including $4.7 billion in share repurchases and $2.9 billion in dividends2. This commitment to returning value to shareholders can contribute to stock stability, which in turn can support gross profit stability by maintaining investor confidence.
In conclusion, while Chevron has faced challenges such as lower earnings and EPS decline, the company's strong gross profit in Q4 2024, combined with its strategic cost-cutting initiatives and commitment to shareholder returns, suggests that Chevron's gross profit is stabilizing in 2024. However, close monitoring of market conditions, cost management, and operational efficiencies will be crucial for maintaining this trend.