Exxon Mobil, the world's largest oil company, disappointed its investors today by announcing profits that fell short of expectations, despite fuel prices reaching record highs.

The group, which reported the highest ever US quarterly profit, of $11.7 billion (£5.9 billion) in the final three months of 2007, had been expected to unveil a $12 billion profit in the first quarter of the year as oil prices reached new records.

Instead, Exxon Mobil reported first quarter net income of $10.9 billion, which was well ahead of the $9.28 billion it announced a year earlier, but well below consensus forecasts. Revenues for the period rose by 34 per cent to $116.85 billion.

The group’s shares fell by 2.5 per cent to $90.77 in early trading.

US oil futures surpassed $100 a barrel for the first time in January and averaged $97.82 for the quarter, a 68 per cent rise on the year-earlier period.

The rising price of oil pushed up profits at Exxon’s oil and gas production unit by 45 per cent to $8.79 billion.

However, the jump in the oil price also hit Exxon, as the group was not able to pass on all of the cost increases to the customers of its refining unit, which recorded a 39 per cent drop in first-quarter profit to $1.17 billion. Profits at its chemicals division fell by 17 per cent, also because the rising oil price hit its margins.

At 17 per cent, Exxon’s year-on-year first-quarter profit increase was less than for key rivals, Royal Dutch Shell and BP, which this week have recorded gains of 25 per cent and 63 per cent respectively.

The disappointing results will put further pressure on Exxon’s senior management to address concerns raised by its shareholders about the direction of the group.

In the most dramatic intervention, the company’s founding Rockefeller family on Tuesday gave warning that Exxon Mobil was falling behind competitors such as BP, Shell, Conoco and Chevron in key areas of renewable energy such as wind and solar power.

The family, which still owns a substantial, but undisclosed, stake called for the appointment of a new independent chairman, which it said would be the best way to shake up the senior management team.

The family’s proposals will be discussed, and in some cases voted on, by investors at the group’s annual shareholder meeting on May 28.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts