🛢 Against oil the odds

What’s going on here?

America’s oil giants ExxonMobil and Chevron defied the odds to report some super-slick results on Friday.

What does this mean?

The first quarter of 2022 was something of an oil bonanza, with the war in Ukraine unleashing sky-high energy prices around the world. So you’d think it would have been tough for oil companies to keep the party going last quarter, especially with Brent crude – a key oil benchmark – down by an average of 16% versus the same time last year. But America’s oil giants refused to bow out, keeping a tight grip on spending to keep margins plump. Exxon, for instance, cranked up output from new offshore developments, hitting a record $11.4 billion in profit – its biggest first-quarter profit ever and more than double the year before. And Chevron dodged the bullet too, relying on its oil refining business to plug the gap left by slipping prices – ultimately netting a slick profit of $6.6 billion.

Why should I care?

For markets: Feeding frenzy.

Chevron sees oil markets bouncing back in the second half of the year, banking on China’s reopening to rev up demand. But even if global economies start sputtering, Exxon and Chevron have aces up their sleeves: massive cash reserves (we’re talking $33 billion and $16 billion, respectively). So even if things do go south, they can simply snap up smaller rivals, juicing growth and snagging sweet deals on struggling competitors.

The bigger picture: Like oil and water.

Maintaining this stellar performance could be kind of tricky. See, oil prices have been on a slippery slope lately, thanks to fears that a downturn could hit demand. And it seems like trouble is indeed brewing in the West. US economic growth fell short of expectations last week, after all – and while the eurozone did manage to return to growth, it looks like the bloc is currently just about treading water.

What’s going on here?

Chinese carmaker BYD zoomed ahead on its own high-speed growth track last quarter.

What does this mean?

While other carmakers have been busy duking it out in price wars, BYD’s got a lot of mileage out of staying in its own lane. And by “mileage”, we’re talking global sales of 550,000 last quarter, sending operating revenue skyward by a staggering 80%. See, one of BYD’s secret weapons is an uber-efficient supply chain, owned by the company itself, covering everything from batteries to chips. And that smooth operation meant that even splurging on new factories didn’t put too much of a dent in profit. In fact, BYD managed to post a mind-boggling 411% profit spike compared to the same time last year – blowing past expectations and even topping 2022’s 400% annual growth.

Why should I care?

Zooming in: Overtaking – and taking over.

BYD’s pedal-to-the-metal performance is bound to prompt some road rage from other global carmakers. See, foreign brands held a comfy 70% share of China’s car market not so long ago. But then along came EVs, and local brands like BYD floored it, leaving the competition in their (environmentally friendly) dust. BYD’s sales figures tell the tale: the company has now sped past Volkswagen, China’s top-selling car brand since 2008, for the first time ever. And with BYD racing past that milestone earlier than planned, rival carmakers had better keep an eye on their own speedometers.

The bigger picture: BYD FTW.

Analysts reckon BYD’s got plenty more left in the tank. With a parade of new models showcased at this month’s Shanghai auto show, the firm’s covering all its bases, from budget-friendly rides to luxury cruisers. And BYD’s got ambitious plans to nearly double last year’s sales in 2023, revving up for a major push into Europe, Latin America, and Asia. Competitors, consider yourselves warned.