FINDLAY, Ohio -- Marathon Petroleum Corp. (MPC) is counting on a recent boost in gasoline demand to help the company maintain its recent "excellence performance" in the first quarter of the year.
"We estimate that U.S. gasoline demand was down about 1.7% … in the first quarter of 2012 compared to a year ago. However, Speedway's April month-to-date same-store sales are up approximately 3.7%, which puts their same-store sales about flat year to date," president and CEO Gary Heminger said on a conference call with analysts yesterday. "Therefore, we expect U.S. gasoline demand to improve throughout 2012 and expect total year 2012 demand to be down less than 1%."
MPC's Speedway retail division saw income from operations at $50 million in the first quarter of 2012, compared with $33 million in the first quarter of 2011. The $17-million increase was primarily the result of a higher merchandise gross margin. Speedway same-store merchandise sales increased 2% in the first quarter of 2012, compared with an increase of 1.7% in the first quarter of 2011.
Speedway gasoline and distillate gross margin per gallon averaged 10.96 cents in the first quarter of 2012, compared with 10.64 cents in the first quarter of 2011.
Heminger said he anticipates the "solid performance" by Speedway will continue as the parent company looks to expand "Speedway retail operations in our existing and contiguous markets."
He also offered an update on Speedway's recent acquisition of GasAmerica. "Speedway's previously announced acquisition of 88 GasAmerica stores along major transportation corridors in Ohio and Indiana will complement its existing seven-state asset base," he said. "We expect that acquisition to be finalized by the end of the second quarter. … The Speedway team continues to operate very well, and we expect they will generate solid value with these new assets."
For the first quarter, MPC reported net income of $596 million, or $1.70 per diluted share, compared with net income of $529 million, or $1.48 per diluted share, in the first quarter of 2011.
"Our first-quarter results reflect excellent performance by our refining and marketing segment, as well as solid earnings contributions from our Speedway and pipeline transportation businesses," Heminger said.
He attributed the strong refining and marketing segment results to the company's ability to capture value from changing market dynamics and acquire price-advantaged crude oil and feedstocks. "Our operational flexibility and efficiency, coupled with the location of our processing capacity, allowed us to take advantage of changing crude differentials in the quarter," Heminger said.
He pointed to MPC's Speedway convenience store subsidiary as another strong contributor during the first quarter, noting that the retail segment had increased its volumes and margins in both fuels and merchandise sales.
MPC, Findlay, Ohio, is the nation's fifth-largest refiner, with a crude capacity of approximately 1.2 million barrels per calendar day in its six-refinery system. Marathon brand gasoline is sold through more than 5,000 independently owned retail outlets across 18 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's fourth-largest c-store chain, with approximately 1,370 locations in seven states.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.