Full-year 2008 earnings were $278 million, or $2 per diluted share compared to $566 million, or $4.06 per diluted share for 2007. Full-year 2008 operating income was $471 million, compared to operating income of $967 million in 2007 because [image-nocss] of lower per barrel refining margins and higher per barrel manufacturing costs.
The company's fourth-quarter segment operating income of $204 million was $196 million higher than the $8 million of segment operating income in fourth-quarter 2007. The increase was primarily due to higher gross margins as it improved its capture of the available industry benchmark margins, especially in the Hawaii and California regions, and improved results from its retail segment. The increase in segment operating income was partially offset by lower throughput rates.
"The actions we've been taking since late in 2007 have positioned the company to succeed even in this weak market environment," said Bruce Smith, chairman, president and CEO of Tesoro. "While falling commodity prices did benefit our wholesale and retail marketing channels, the capital and noncapital initiatives we implemented beginning in early 2008 have enhanced our ability to deliver substantial and sustainable improvements in our capture of the available margin, and I am pleased to see these successful efforts reflected in our fourth-quarter results."
He added, "While the strength in first-quarter West Coast margins has been a pleasant surprise, we plan to continue to follow our 2009 business plan which is based on industry benchmark margins that are lower than 2008, and our expectation that we will realize continued improvement in margin capture. Our program of noncapital objectives and benefits of our 2008 income capital spending is resilient and continues to provide the platform for our organic growth opportunities."
San Antonio-based Tesoro is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates seven refineries in the western United States with a combined capacity of approximately 660,000 barrels per day. Tesoro's retail-marketing system includes more than 870 branded retail stations, of which more than 380 are company operated under the Tesoro, Shell, Mirastar and USA Gasoline brands.
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