PHILADELPHIA -- Sunoco Inc. has reported a net loss of $9 million (8 cents per share diluted) for fourth-quarter 2007 versus net income of $123 million ($1 per share diluted) for fourth-quarter 2006. For the full-year 2007, Sunoco reported net income of $891 million ($7.43 per share diluted) versus $979 million ($7.59 per share diluted) for the full-year 2006.
"Despite significant market volatility, 2007 was another very good year for Sunoco, with earnings reflecting, on average, strong refining margins and a positive contribution from each of our nonrefining businesses," said John G. [image-nocss] Drosdick, Sunoco's chairman and CEO. "During the year, we also successfully executed our capital program in Refining & Supply that has provided meaningful capacity, conversion and reliability improvements within the spending budget we outlined at the beginning of the year."
He added, "Fourth-quarter financial performance was negatively impacted by the sharp increase in crude oil prices which occurred throughout the period. This resulted in lower refining, retail and chemicals margins…. However, we did achieve strong operating performance in our refining system where we set a quarterly record for total net production available for sale of 962 thousand barrels per day. Reflecting some of the benefit from the major capital projects completed early in 2007, we also set a quarterly record for jet fuel production at our Toledo refinery and, in the Northeast, produced a record yield of higher-value light products and less lower-valued residual fuel."
Commenting on the outlook for first-quarter 2008, Drosdick said, "The market for refined products has remained weak early in 2008, reflecting continued high costs for crude oil and transportation. Operationally, we have planned maintenance work in both our Northeast and MidContinent systems, which is expected to reduce refinery production by approximately 7 million barrels during February and March. As industry maintenance activity accelerates and the switchover to summer-grade gasoline approaches, we expect market conditions to improve later in the quarter."
Refining & Supply earned $43 million in fourth-quarter 2007 versus $126 million in fourth-quarter 2006. The decrease in earnings was due to the unfavorable impact on refining margins of higher crude oil feedstock costs as well as higher refinery expenses primarily attributable to the increased costs of purchased fuel and utilities. Partially offsetting the decline were higher production volumes as crude unit utilization in fourth-quarter 2007 averaged 97%.
Retail Marketing earned $1 million in fourth-quarter 2007 versus a loss of $11 million in fourth-quarter 2006. The increase in earnings was primarily due to higher average retail gasoline margins and lower expenses. Versus fourth-quarter 2006, monthly gasoline and diesel throughput per company-owned or leased outlet increased approximately 2% and convenience store merchandise sales were up approximately 6%. After-tax gains from Sunoco's Retail Portfolio Management program totaled $4 million and $2 million in the 2007 and 2006 fourth-quarter periods, respectively.
During fourth-quarter 2007, Sunoco recorded a $17 million after-tax accrual related to the tentative settlement of certain methyl tertiary butyl ether (MTBE) litigation. The company is attempting to recover the amount it is required to pay in settlement from its insurance carriers.
Sunoco earned $891 million, or $7.43 per share of common stock on a diluted basis, for full-year 2007 versus $979 million, or $7.59 per share, in the 2006 period. The decrease was primarily due to higher expenses, lower realized margins in Sunoco's Refining & Supply and Retail Marketing businesses. Partially offsetting these negative factors were a $58 million net after-tax benefit attributable to special items, higher gains on asset divestments and a lower effective tax rate.
Sunoco, headquartered in Philadelphia, is a manufacturer and marketer of petroleum and petrochemical products. With 910,000 barrels per day of refining capacity, nearly 4,700 retail sites selling gasoline and convenience items, approximately 5,500 miles of crude oil and refined product owned and operated pipelines and 38 product terminals, Sunoco is one of the largest independent refiner-marketers in the United States.
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