SCOTTSDALE, Ariz. -- Giant Industries Inc. has reported full-year 2005 net earnings of $103.9 million or $7.62 per diluted share versus net earnings of $16.2 million or $1.42 per diluted share in 2004. For fourth-quarter 2005, net earnings were $26.6 million or $1.82 per diluted share compared to net earnings of $729,000 or 6 cents per diluted share for fourth-quarter 2004.
Fred Holliger, Giant's CEO, said, This past year was an outstanding year for Giant as we grew earnings and improved our balance sheet. In our refining operations, stronger margins, [image-nocss] both on the East Coast and in the Four Corners region, resulted in operating income rising approximately $111.6 million over 2004's level. Within our wholesale operations, Phoenix Fuel's continued growth in both wholesale and cardlock fuel volumes, coupled with an increase in fuel margins, achieved an improvement of approximately $6.8 million in operating income over the prior year's level.
He added, Since its acquisition in July 2005, Dial Oil has also contributed to earnings; in fact, their earnings have consistently exceeded our original expectations. Our retail operations continued to achieve growth in both merchandise and fuel sales on a comparable store basis. This sales growth combined with stronger fuel and merchandise margins resulted in an approximately $4.7 million improvement in operating income over the prior year level.
Our fourth-quarter 2005 results were quite strong given the fact that our largest refinery did not operate the last week of November and the entire month of December as a result of the fire that occurred at the facility on November 25, 2005. In addition to the loss of production, refining group fourth-quarter operating income was negatively impacted by approximately $3.5 million of expenses associated with the fire and expedited maintenance that we chose to perform while the refinery was down. Refining operating income for the quarter was up approximately 404% versus the fourth quarter of 2004. On Jan. 18, 2006, we resumed partial operations at the Yorktown refinery. The refinery is operating at approximately two-thirds capacity or approximately 40,000 barrels per day and is currently targeted to return to full operation in April of this year.
In the fourth quarter, the operating income contribution from our wholesale operations increased by approximately 109% as a result of improved margins at Phoenix Fuel and the contribution from Dial Oil. Our retail operations saw operating income increase by approximately 272% versus the fourth quarter 2004, as a result of increased fuel and merchandise sales coupled with improvement in both fuel and merchandise margins.
Commenting on first-quarter operations, Holliger said, As a result of a relatively mild winter and higher import levels that have contributed to a build in inventory levels refining margins at Yorktown are currently lower than the same time last year. Additionally, because of the fire, we are not operating our FCC unit at Yorktown. As a result, we are selling the feedstocks for the FCC unit that would normally be processed into higher valued gasoline and diesel. We have business interruption insurance coverage for the earnings impact of the fire after the policy's 45-day waiting period is exceeded, which occurred on Jan. 9, 2006. Refining margins at the Four Corners refineries are currently higher than the same time last year. We continue to believe that the removal of MTBE [methyl tertiary butyl ether] from the gasoline pool later this spring, and the transition to ultra-low-sulfur diesel this summer, coupled with refining capacity constraints, support a positive outlook for the industry in 2006.
He concluded, The wholesale group continues to experience growth in fuel volumes, but is experiencing lower fuel margins compared to the same time last year. Our retail operations are continuing to experience growth in both merchandise and fuel sales on a comparable-store basis. Recently, fuel margins within our retail operations have improved primarily due to decreases in the cost of fuel, while merchandise margins have remained stable.
Scottsdale, Ariz.-based Giant is a refiner-marketer that owns and operates one Virginia and two New Mexico crude oil refineries; a crude oil gathering pipeline system based in Farmington, N.M., which services the New Mexico refineries; finished products distribution terminals in Albuquerque, N.M., and Flagstaff, Ariz.; a fleet of crude oil and finished product truck transports; and a chain of retail service station/convenience stores in New Mexico, Colorado and Arizona. Giant is also the parent company of Phoenix Fuel Co. Inc. and Dial Oil Co., both of which are wholesale petroleum products distributors.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.