⚠ Two Point Seven Per Cent on Thirty Billion DollarsHigh threat

ExxonMobil (XOM) — threat to the moat

Ten per cent of the company's capital is invested in a business that earned a third of a bank deposit.

Chemical Products employed $29,510 million of average capital in 2025 and earned $800 million on it: 2.7 per cent, down from 8.9 per cent the year before1. The non-US half lost money outright, at minus 0.7 per cent2. Ten per cent of the company's capital is invested in a business earning a third of a bank deposit.

Chemical Products return on capital employed11.4%2024 United States6.4%2025 United States6.4%2024 non-US-0.7%2025 non-USOn $29,510m of average capital employed. The non-US half lost money in 2025.
Ten per cent of the company’s capital, earning a third of a bank deposit.

The cause is not ExxonMobil's operations — its American half of the segment returned 6.4 per cent while the non-American half lost money on a comparable asset base — but the structure of the global market. Petrochemical capacity has been added faster than demand for a decade, much of it in China, and the risk factors name the mechanism: increases in industry refining or petrochemical manufacturing capacity relative to demand tend to reduce margins on the affected products3. In a business where every producer sells the same polyethylene, excess capacity goes straight into the price.

ExxonMobil's position is better than most because of feedstock, and the 2026 recovery shows it: Chemical Products earned $1,131 million in the second quarter of 2026 alone against $800 million for the whole of 20254. But a business that needs a favourable feedstock spread to earn anything is a business whose returns belong to the gas market rather than to the chemistry.

The segment is also not small enough to ignore and not large enough to matter. Its $22,209 million of sales in 2025 were seven per cent of the company5 and its $800 million of earnings were two and a half per cent of segment income6. It consumed $1,395 million of cash capital expenditure in the same year7 — more than it earned.

The strategic case is that chemicals demand grows faster than fuel demand and will outlast it, which is a genuine argument and a long one. The financial case has to be made in returns over a cycle.

Chemical Products return on average capital employed, across a full cycle, is the only fair test. It has run 2.7, 8.9 and, by implication from the earnings, higher again in 2023 — but the multi-year average is in the high single digits on $29.5 billion8, which is below any reasonable cost of capital. Five more years of that would make the segment a candidate for the divestment list rather than the growth plan.

References
  1. ReportedChemical Products employed $29,510 million of average capital in 2025 and earned $800 million on it: 2.7 per cent, down from 8.9 per cent the year before.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
  2. ReportedThe non-US half lost money outright, at minus 0.7 per cent.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
  3. ReportedPetrochemical capacity has been added faster than demand for a decade, much of it in China, and the risk factors name the mechanism: increases in industry refining or petrochemical manufacturing capacity relative to demand tend to reduce margins on the affected products.
    Exxon Mobil Corporation Form 10-K for FY2025, Item 1A Risk Factors — supply and demand, economic conditions, other demand- and supply-related factors, other market factors, government and political factors, access limitations, lack of legal certainty, regulatory and litigation risks, and the climate change and energy transition discussion. — FY2025 · publ. February 2026 · source ↗
  4. ReportedExxonMobil's position is better than most because of feedstock, and the 2026 recovery shows it: Chemical Products earned $1,131 million in the second quarter of 2026 alone against $800 million for the whole of 2025.
    ExxonMobil Holdings Corporation Form 10-Q for the quarter ended 30 June 2026, Management's Discussion and Analysis — the review of second quarter results, the segment earnings driver analyses for Upstream, Energy Products, Chemical Products and Specialty Products, the operational results tables for production, refinery throughput and sales volumes, the liquidity discussion, and the structural cost savings calculation. — Q2 2026 · publ. August 2026 · source ↗
  5. ReportedIts $22,209 million of sales in 2025 were seven per cent of the company and its $800 million of earnings were two and a half per cent of segment income.
    Exxon Mobil Corporation Form 10-K for FY2025, notes to the consolidated financial statements — Note 3 Disclosures about Segments and Related Information (segment revenue, intersegment revenue, segment income, additions to property plant and equipment, total assets, geographic revenue and the revenue-from-contracts disaggregation), Note 7 Litigation and Other Contingencies, and Note 20 Mergers and Acquisitions covering Pioneer Natural Resources and Denbury. — FY2025 · publ. February 2026 · source ↗
  6. ReportedIts $22,209 million of sales in 2025 were seven per cent of the company and its $800 million of earnings were two and a half per cent of segment income.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
  7. ReportedIt consumed $1,395 million of cash capital expenditure in the same year — more than it earned.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
  8. ReportedIt has run 2.7, 8.9 and, by implication from the earnings, higher again in 2023 — but the multi-year average is in the high single digits on $29.5 billion, which is below any reasonable cost of capital.
    Exxon Mobil Corporation Form 10-K for FY2025, Business Profile (Financial) — earnings after income taxes, average capital employed, return on average capital employed and cash capital expenditures for each segment and geography, and the corporate total. — FY2025 · publ. February 2026 · source ↗
Sources
Generated September 23, 2026