Top 5 Most Profitable Companies in 2012
5 Wells Fargo – Profit: $18.8 Million
Rounding out the list at number five is San Francisco-based Wells Fargo. With profits totaling $18.8 million in 2012, much of the financial company’s monetary success came from refinancing mortgages in the wake of the housing crisis. As a result, profits increased by nearly 20 percent, positioning Wells Fargo as the largest mortgage lender in the U.S. However, revenue from this industry is likely to be short-lived, since it is showing signs of slowing down. One reason is interest rates are increasing, which will likely cause borrowers to no longer see refinancing as a viable option and make it more difficult for Wells Fargo to unload the mortgages it currently holds.
4 JP Morgan Chase & Co – Profit: $21.2 Million
Headquartered in New York City, JP Morgan Chase & Co, commonly known as Chase, comes in at number four with 2012 profits totaling $21.2 million. Nowadays, you can’t walk one mile without seeing a Chase branch. The fact that this financial behemoth enjoyed record high profits is not much of a surprise. Despite losing $6.2 million in the “London Whale” scandal—named for a London Chase trader who gambled on risky ventures and lost big—the company enjoyed a 12 percent increase in profits over the previous year due to higher merger and acquisition fees, debt and equity underwriting, and high investment banking performance. It also helped that Chase was not plagued by mortgage-related losses like competitors Bank of America and Citigroup.
3 Chevron – Profit: $26.1 Million
Headquartered in San Ramon, California, Chevron lands at number three with total profits of $26.1 million in 2012, with a large percentage of these profits from international sales. Like Exxon Mobile, Chevron kept its refineries fully operational at a time when other energy companies downsized or closed their facilities when oil prices began to rise. However, when domestic crude and natural oil became widely available and cheaper, Chevron was able to take advantage of these conditions and use its refineries to produce fuel, such as gasoline and diesel, at a lower cost, yielding substantial profits for the company. In addition to its work in the natural gas sector, Chevron also has large shipping and pipeline operations and operates gas stations under the Caltex, Texaco and Chevron brands.
2 Apple – Profit: $41.7 Million
Despite the death of co-founder and CEO Steve Jobs in late 2011, Apple has managed to maintain its foothold in the smartphone and tablet PC market. With a total profit of $41.7 million in 2012, Apple sits comfortably at number two on the list. Headquartered in Cupertino, California, Apple owes much of its success to the iPhone, which accounted for approximately two-thirds of its profits and nearly half of the company’s total revenue in 2012. However, Apple risks losing its competitive edge if it is unable to block or stymie the headway Samsung and other rival manufacturers of Android-based devices are beginning to make into the market.
1 Exxon Mobile – Profit: $44.8 Million
The most profitable company of 2012 was Exxon Mobile. Based in Irving, Texas, the Fortune 500 company enjoyed $44.8 million in profits, up 9.3 percent from the previous year. Despite poor revenues caused by the increase of domestic crude and natural gas available, Exxon Mobile was able to offset these losses through its ability to produce fuel cheaply using its refineries, yielding substantial profits. In addition to its exploration and refining operations, Exxon Mobile is expanding into the competitive and rapidly growing oil sands business—a new way to produce crude oil. The company also appears to be listening to the increasing public demand for fuel efficiency and clean energy options. It has announced plans to spend $185 billion on energy initiatives over the next five years.