US Sunoco Q4 earnings dip 87.3% on slump in refining, chem demand

04 February 2010 22:19  [Source: ICIS news]

HOUSTON (ICIS news)--Sunoco earned $26m (€18.7m) in the fourth quarter, down 87.3% from $204m a year earlier as weak demand and rising feedstock costs continued to pressure the company’s refining and chemicals results, the US refiner said on Thursday.

Excluding special items, the company had a fourth-quarter loss of $31m, compared with a $313m profit in the 2008 fourth quarter. Sales, however, were $8.97bn – up 3.8% from a year earlier.

“We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and excess global supply,” said CEO Lynn Elsenhans.

“While our refining and chemicals results were significantly impacted in 2009 by weak demand and rising feedstock costs, we managed to produce strong earnings in our other businesses as a result of good execution and a sharp focus on costs,” she added.

Elsenhans also pointed to two recent moves – the company’s $350m sale of its polypropylene (PP) business to Braskem, and the permanent closure of its Eagle Point refinery – as examples of its cost focus. Because of those moves, the company could redeploy capital to the growth of its logistics and coke businesses, Elsenhans said.

The coke business showed the most fourth-quarter growth, earning $78m – nearly triple the $28m from a year earlier.

Meanwhile, logistics earned $22m, down from $29m in the 2008 fourth quarter. Losses were held in check as higher earnings from the company's refined product pipeline and terminalling operations boosted the business.

Sunoco’s refining and supply segment – by far its largest – posted a net loss from continuing operations of $135m, down from a net income of $146m a year earlier. The company cited lower margins and production volumes for the decrease.

Likewise, income for the company’s retail marketing segment declined to $21m from $103m in the 2008 quarter, due to lower average retail gasoline and distillate volumes.

The chemicals segment reported income of $6m, up from a $4m loss due primarily to lower expenses and the absence of a $12m after-tax market adjustment to PP inventory in the 2008 fourth quarter, Sunoco said.

For the full year, Sunoco reported a $329m net loss, compared with a net profit of $776m in 2008. Sales were $31.3m, down from $51.1m in 2008.

“While we entered 2009 expecting a challenging market for petroleum and chemical products, the depth and scale of the global economic downturn and its impact on our industry was even greater than anticipated,” Elsenhans said.

After the earnings release, Sunoco traded down 60 cents, or 2.3%, to $25.07/share in after-market electronic trading on the New York Stock Exchange.

($1 = €0.72)

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By: Ben DuBose
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