Sunoco Refining & Supply business unit earns $32 mn in Q2

02 Sep '08

5 min read

In our Coke business, initial production has commenced at our second coke making facility at Haverhill, Ohio with full coke production expected by the end of the third quarter.

With the completion of this project and the impact of higher coal prices in the second half, we now expect the Coke business to earn approximately $110-$115 million in 2008.

"Finally, I want to reiterate how pleased we are to welcome Lynn Laverty Elsenhans to Sunoco as our new Chief Executive Officer and President on Friday, August 8, 2008.

We continue to believe that our portfolio of assets offers unique opportunities for shareholders within our sector. With Lynn's extensive experience and industry background, she is prepared to build on the Company's sound strategic position and meet the challenges and opportunities that lie ahead."

Refining and Supply earned $32 million in the second quarter of 2008 versus $482 million in the second quarter of 2007. The decrease in earnings was due to significantly lower realized margins along with higher expenses and lower production volumes.

The lower margins reflect the negative impact of higher average crude oil costs and lower product demand than a year ago, especially for gasoline, while the higher expenses were largely the result of increased prices for purchased fuel and utilities.

Production volumes decreased in the second quarter of 2008 compared to the year-ago period due to planned and unplanned maintenance work and economically driven rate reductions, which were partially offset by the impact of the major turnaround and expansion work at the Philadelphia refinery during the second quarter of 2007.

Retail Marketing had breakeven results in the second quarter of 2008 versus income of $30 million in the second quarter of 2007.

The decrease in earnings was primarily due to lower average retail gasoline margins and lower divestment gains attributable to the Retail Portfolio Management program.

Chemicals earned $3 million in the second quarter of 2008 versus $6 million in the prior-year period. The decrease in earnings was due primarily to lower margins and sales volumes, partially offset by lower expenses.

The lower margins were primarily due to higher feedstock costs, while the lower expenses were largely due to the transfer of cumene and propylene splitter assets to Refining and Supply, effective January 1, 2008.

Earnings for the Logistics segment were $21 million in the second quarter of 2008 versus $10 million in the second quarter of 2007.

The increase was due to record results from Sunoco Logistics Partners L.P. which benefited from asset growth and strong performance in its western pipeline system as well as higher earnings from the eastern pipeline system and terminalling operations.

Sunoco Inc

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