Tesoro Corp. (TSO) swung to a fourth-quarter profit on higher
margins resulting from lower oil prices and tighter supply.
Refiners' margins, or the difference between the price they pay
for crude and the price they get for the gasoline they sell, have
climbed as crude prices fell and production cuts limited the supply
of gasoline, despite weak demand. Nevertheless, Tesoro and other
refiners have reduced capital spending amid the recession.
The company currently predicts 2009 capital spending to be about
$600 million, down from $724 million in 2008.
Tesoro, the third-largest U.S. refiner by capacity, reported net
income of $97 million, or 70 cents a share, compared with a net
loss of $40 million, or 29 cents a share, a year earlier.
The latest results included a 41-cent-a-share accrual for
doubtful accounts receivable and a 12-cent accrual reversal after a
reduction in estimated costs associated with asset-retirement
obligations. Excluding items, earnings swung to a profit of 99
cents a share from year-ago loss of 29 cents.
Revenue dropped 34% to $4.33 billion from $6.53 billion.
Last month, Tesoro forecast earnings of 60 cents to 75 cents a
share. Analysts' latest estimates were for per-share earnings of 91
cents on revenue of $5.78 billion, according to a poll by Thomson
Reuters.
Daily throughput was 555,000 barrels, down 13.1%.
Profit rose 8.4% in the refining business and more than doubled
in the retail unit.
Overall refining margins rose 51% to $12.47 a barrel.
Sales volumes for refined products slipped 9.9%, with gasoline
and gasoline blends down 10.3% and jet fuel down 16%. Diesel
volumes grew 7.1%.
"While falling commodity prices did benefit our wholesale and
retail marketing channels, the capital and non-capital 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," said Bruce Smith,
chairman, president and chief executive of Tesoro.
Tesoro's shares were at $16.35, up 15 cents in after-hours
trading. The stock price has fallen 34% in the past year.
-By Adam O. Manzor and Kathy Shwiff, Dow Jones Newswires;
201-938-5975; Kathy.Shwiff@dowjones.com
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