SCOTTSDALE, Ariz. -- Giant Industries Inc. has reported a net loss for the first quarter ended March 31, 2006, of $12.4 million or an 85-cent loss per diluted share. This compares to net earnings for first-quarter 2005 of $10.1 million or 80 cents per diluted share.
Fred Holliger, Scottsdale, Ariz.-based Giant's CEO, said, Our first quarter was negatively impacted by low production levels at the Yorktown refinery. Earnings in the first quarter at our Four Corners refineries exceeded the prior year level as well as their budgeted levels for the first [image-nocss] quarter of 2006 as refining margins were strong in our marketing areas.
The company is currently in discussions with its insurers regarding recoveries relative to the property damage and business interruption loss at Yorktown after a fire. In the first quarter, he said, it received a partial advance of $9.9 million. Due to the refining margin environment during our outage we believe that these reimbursements will have a significant impact on our 2006 earnings, said Holliger.
He added, Retail operations operating profit was up $2.7 million as a result of improvement in fuel margins and improved merchandise and fuel sales in the first quarter of 2006 compared to the first quarter last year. Same-store fuel volumes increased by more than three percent and merchandise sales increased about 6% in the quarter over last year's first quarter level. Our wholesale operations also continued to perform well in the first quarter of 2006 as the operating income contribution from our wholesale operations increased by approximately 32% as a result of the additional contribution from an acquisition completed in July 2005.
Commenting on second-quarter operations, Holliger said, Refining margins at the Four Corners refineries and Yorktown refinery are currently higher than the same time last year. We continue to believe that strong product demand coupled with refining capacity constraints support a positive second-quarter outlook for the industry as well as the remainder of 2006. The wholesale group continues to experience growth in fuel volumes and higher 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 been lower primarily due to increases in the cost of fuel, while merchandise margins have remained stable.
Separately, Philadelphia-based Sunoco Inc. has reported net income of $79 million (59cents per share diluted) for first-quarter 2006 versus $116 million (83 cents per share diluted) for first-quarter 2005. There were no special items in either quarter.
First-quarter earnings were impacted by a high level of refinery maintenance and rising crude oil prices during the quarter, said John G. Drosdick, Sunoco chairman and CEO. High beginning-of-the-year refined product inventories and unseasonably warm winter weather in the northeastern United States negatively impacted refining margins while rising crude oil prices squeezed retail gasolinemargins during the quarter.
Drosdick continued, Utilization at our refining facilities was limited to 93% for the quarter due to maintenance ahead of this year's driving season. We recently completed a turnaround at our Toledo refinery and are now positioned to run at capacity levels during the peak summer demand months. We are also near completion of the necessary capital investments to ready our refining system for the upcoming diesel fuel specification changes. Still, the current rollout of ethanol-blended gasoline and the transition to ultra-low-sulfur diesel fuel present significant manufacturing and logistical challenges for the industry. We will continue to invest significant capital in our refining facilities. We have spent approximately $700 million to comply with the new low-sulfur gasoline and on-road diesel requirements. Looking ahead, over the next three years, we plan to spend approximately $2 billion to increase production and further improve and maintain our refining system.
Refining and supply earned $73 million in the first quarter versus $108 million in first-quarter 2005. The decrease in earnings was due to lower production volumes in Northeast refining and higher expenses. The lower volumes were mainly a result of a previously announced scheduled refinery maintenance. Higher expenses in the quarter were mainly the result of higher purchased fuel costs and expenses associated with maintenance activity. Also contributing to the increase in expenses were operating costs to produce low-sulfur gasoline.
Realized margins for refining and supply in the first quarter were slightly higher than the year-ago period with lower margins in Northeast refining being offset by higher margins in MidContinent refining.
Retail marketing posted breakeven results in first-quarter 2006 versus an $8 million loss in first-quarter 2005. While retail gasoline margins were poor during most of the current quarter, they were slightly higher than the year-ago period. Monthly gasoline and diesel throughput per company owned or leased outlet was approximately the same versus first-quarter 2005.
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