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    Delek, Alon Earnings Fall in Q3

    Like much of the industry, lower refining margins are to blame.

    NEW YORK -- Two oil refining and marketing companies, Delek US Holdings Inc. and Alon USA Energy Inc., have more in common than Israel-based parents -- both reported lower earnings for the third quarter this week, as a result of lower refining margins.

    Brentwood, Tenn.-based Delek saw net income fall to $20.4 million, compared to $26.3 million for the third quarter 2006, the company reported.

    While the earnings were positively impacted by higher contributions from its marketing segment and higher merchandise sales in the retail segment, it could not overcome increases in crude prices, which impacted the contribution margin in its refining segment, the company

    "Our retail and marketing segments contributed over 50 percent of our total contribution margin, which demonstrates the success of our diversified business model," Uzi Yemin, president and chief executive
    officer of Delek US, said in a statement. "At the same time, we expanded our portfolio through the acquisition of a 34.6 percent equity investment in Lion Oil."

    The refining segment contributed $26.8 million for the third quarter of 2007, declining from the $36.5 million in the comparable quarter.

    In the retail segment, contributions were $21.2 million, just short of the $23.1 million seen in the year-ago period. In addition, net sales for the third quarter rose 19.7 percent to $481.1 million, which was attributed to the addition of 107 stores purchased from Calfee Co. of

    Meanwhile, net income for Alon USA, headquartered in Dallas, fell to $12.6 million, from the $38.1 million for the same period last year, due to lower asphalt margins and lower refinery operating margins at both its Big Spring and California refineries, the company stated.

    "This was a challenging quarter as earnings were negatively affected by record crude oil prices, which resulted in lower margins, particularly in Alon's asphalt segment," Jeff Morris, Alon president and CEO, said in a statement. "We remain optimistic about our future
    operations. At the end of the third quarter we started up the fourth crude unit in the California refineries, furthering our long term plan of running 90,000 barrels per day. Also, our Big Spring refinery was acknowledged as being the best refinery in the Mid-Continent region, based on the latest Solomon Study."

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