Sunoco quarterly profit falls 38% as gasoline profit margin shrinks

Like other oil refiners, Philadelphia's Sunoco Inc. experienced a sharp decline in its third-quarter profit as prices for gasoline and other products failed to keep up with a surge in the cost of crude oil.

Sunoco said after the stock market closed yesterday that its third-quarter net income was $216 million, or $1.81 a share, down 38 percent from $351 million, or $2.76 a share, a year ago.

Quarterly revenue at the largest refiner in the Northeast was $11.5 billion, up 9.5 percent from $10.5 billion last year.

The company's chairman and chief executive officer, John G. Drosdick, called the results solid, given the "very volatile market."

Since Aug. 24, when crude began its 35 percent run-up from $69.83 a barrel on the New York Mercantile Exchange to yesterday's record of $94.53, the wholesale price of gasoline on the same market has risen only 22 percent, to $2.34 a gallon from $1.92.

As usual, Sunoco, which has three of its five refineries in the Philadelphia region, earned most of its money from turning crude oil into gasoline, diesel, petrochemicals and other products.

But that profit fell 37 percent in the quarter to $171 million from $273 million last year, because of a 20 percent decline in realized profit margins on each barrel of crude and higher refinery expenses.

Profits from retail sales of gasoline and other products plummeted 60 percent, to $31 million this year from $77 million last year.

Other companies also reported declines in refining and marketing profits.

Hess Corp. of New York yesterday reported a 70 percent decline in profits from refining and marketing, to $46 million, but had an overall gain because profits from oil production more than doubled to $414 million.

ConocoPhillips, which operates a refinery along the Delaware River in Trainer with the capacity to process 185,000 barrels of oil per day, said last week that its third-quarter refining and marketing profits were $1.31 billion, off 45 percent from a year ago.

Sunoco's shares gained $1.90, or 2.65 percent, to close at $73.60 during regular trading on the New York Stock Exchange. In after-hours trading, the company gave back most of that gain, sliding $1.50, or 2 percent, at one point to as low as $72.10.

Sunoco's third-quarter earnings of $1.81 a share were in the lower end of the range of $1.75 to $2.64 expected by 20 analysts who follow the company, according to Bloomberg News.