Sunoco Inc. reported its 2010 second quarter results today, including a net income attributable to Sunoco shareholders of $145 million ($1.20 per share diluted) compared to a net loss attributable to Sunoco shareholders of $55 million ($.47 per share diluted) for the second quarter of 2009.
“While market conditions during the second quarter remained challenging, our refining business was profitable for the first time since the first quarter of 2009. This is a clear indication that our decisive actions are beginning to show results. By improving margin capture, reducing costs, and optimizing the performance of our refineries, we achieved solid results during a period of continued economic weakness and excess supply of petroleum and chemical products,” said Lynn Elsenhans, chairman and CEO of Sunoco.
Excluding special items, Sunoco’s income for 2010 Q2 totaled $158 million ($1.31 per share diluted) versus a 2009 second quarter loss of $31 million ($.27 per share diluted).
For the first six months of 2010, Sunoco reported net income attributable to Sunoco shareholders of $82 million ($.69 per share diluted) versus a net loss attributable to Sunoco shareholders of $43 million ($.37 per share diluted) for the first six months of 2009.
“Sunoco’s non-refining businesses are providing steady earnings and our balance sheet is very strong,” Elsenhans added. “We remain focused on the fundamentals: running our refineries safely and reliably at optimal capacity utilization, lowering our breakeven cost per barrel, and furthering the progress we have made in capturing available margin.”
Sunoco significantly improved its cash position, ending the quarter with $1.5 billion of cash, with the increase largely driven by strong operating cash flows and the receipt of proceeds from the sale of the polypropylene business which closed in the first quarter of 2010.
“Our recently announced intent to separate SunCoke Energy from the rest of Sunoco in the first half of 2011 is part of a strategy to unlock shareholder value and maximize the future success of both entities,” Elsenhans continued. “The fuels and coke units are distinct businesses with different models, different sets of customers and no significant integration or synergies.”
With a dedicated management team and direct access to capital markets, SunCoke Energy should be better able to achieve the scale needed to pursue domestic and international growth opportunities. Similarly, through a more focused strategic plan, Sunoco’s streamlined fuels business should be better positioned to take advantage of growth opportunities and become the premier provider of transportation fuels in its markets.
“We see potential opportunities to grow inside and outside Sunoco’s traditional footprint both in Retail and through Sunoco Logistics, as recently announced logistics acquisitions and projects demonstrate,” said Elsenhans.
Retail Marketing earned $45 million in the current quarter versus $10 million in the second quarter of 2009. The increase in earnings was due to higher average retail gasoline margins driven by falling wholesale prices and lower expenses.
Refining and Supply
Refining and Supply had income from continuing operations of $86 million in the second quarter of 2010 versus a loss of $77 million in the second quarter of 2009. The increase in results was due to higher realized margins and lower expenses, partially offset by lower production volumes, which were largely attributable to the closure of the Eagle Point refinery in the fourth quarter of 2009. The overall crude utilization rate was 92% for the quarter, up from 79% in the first quarter of 2010, which was impacted by significant planned turnaround activities. Lower expenses were largely the result of cost reductions related to the business improvement initiative carried out during the last three quarters of 2009 and the closure of the Eagle Point refinery in the fourth quarter of 2009. Also contributing to the lower expenses were lower costs for purchased fuel and utilities and the absence of the write-off of certain assets in connection with the shutdown of the ethylene complex at the Marcus Hook refinery in 2009.
Discontinued Tulsa refining operations, which were divested on June 1, 2009, had a loss of $6 million in the second quarter of 2009.