$8 Million Retail Marketing Loss
Sunoco reports first-quarter results
PHILADELPHIA -- Sunoco Inc. has reported net income of $116 million ($1.67 per share diluted) for first-quarter 2005 versus $89 million ($1.17 per share diluted) for the 2004 first quarter.
Retail Marketing had a loss of $8 million in first-quarter 2005 versus a loss of $4 million in first-quarter 2004. The decrease in results was due largely to lower retail margins for gasoline and distillate, partially offset by lower expenses. Current quarter results included a $2 million income contribution from the ConocoPhillips sites acquired in April 2004.
Our first-quarter results reflect an excellent start to 2005, said John G. Drosdick, Sunoco Chairman and CEO. While Refining & Supply results were up only modestly versus the first-quarter 2004, significantly higher Chemicals earnings, lower net financing expenses and 9% fewer shares outstanding enabled us to increase earnings per share by 43% versus the year-ago quarter. With favorable market conditions entering the driving season, momentum remains positive for the company.
Regarding the first-quarter's results, Drosdick said, Our Refining & Supply business continued to lead the way, earning $108 million for the quarter. Margins, although lower than the 2004 fourth quarter in the Northeast, were still well above historical norms. Our Refining & Supply results also benefited from 3% higher production than last year's first quarter and increased use of discounted high-acid crude oils in Northeast Refining.
Retail Marketing lost $8 million, he said, as retail margins could not keep pace with persistently rising wholesale prices, which increased over 40 cents per gallon during the quarter. As we approach the peak driving season, market conditions for this business are improved.
Refining & Supply earned $108 million in the current quarter versus $100 million in first-quarter 2004. The $8 million increase was largely due to higher realized margins and higher production volumes. The first quarter of 2004 included significant scheduled maintenance activity in MidContinent Refining. Partially offsetting these positive variances were higher expenses, including fuel and other energy-related expenditures.
Total crude unit throughput averaged 875,000 bpd (97% utilization) for the quarter, with total production available for sale approximating 83 million barrels.
Drosdick added, We have gradually increased our processing of such crudes over the past three quarters and averaged approximately 48,000 barrels per day in the first quarter. With continued strong discounts to light-sweet crude oils, we would expect to process approximately 60,000 to 70,000 bpd of high-acid crude oils in the second quarter. Without new units or additional capital, our refining organization has met the challenges of processing these crude oils, improving our refining margins and increasing our crude oil options for the future.
Sunoco, Philadelphia, has 900,000 bpd of refining capacity, approximately 4,800 retail sites, more than 4,300 miles of crude oil and refined product pipelines and 38 product terminals.