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    Delek and Alon See Net Loss in First Quarter

    Record crude prices and lower refining margins are the culprit.

    BRENTWOOD, Tenn. -- Delek US Holdings Inc. suffered a net loss of $5 million in the first quarter of fiscal 2008, compared with net income of $20.9 million compared to the same time period last year.

    According to the report, the loss includes a $6.5 million realized, after-tax, non-cash loss associated with the company's equity investment in Lion Oil Co. and a recognized $2.1 million after-tax, non-cash gain related to its ethanol hedging positions.

    "We recognize each of our operating segments had positive contribution to our consolidated contribution margin in what proved to be a challenging environment," Uzi Yemin, Delek’s president and chief executive officer, said in a released statement. "At the same time, we strengthened our balance sheet by reducing our net debt position by $23 million and increased our ethanol blending in both our refining and retail segments."

    Compared to the first quarter of 2007, Delek's first quarter results were significantly impacted by 68 percent higher crude prices, lower gasoline margins at the refinery and higher retail fuel prices at the pumps, all of which were offset by higher refinery throughputs, the report stated.

    The company's merchandise sales in its retail segment for the quarter were $97.1 million, and represented an 18.7 percent increase driven by $17.4 million in merchandise sales associated with the Favorite Markets stores acquired during 2007, the company stated.

    Retail fuel margins for the first quarter 2008 increased to 12.6 cents per gallon from 12.3 cents per gallon, which was supported by the introduction of E10 blended fuel in the fourth quarter of 2007. Retail fuel gallons sold in the first quarter 2008 increased 3.8 percent, the report stated.

    Meanwhile, from its Dallas headquarters, Alon USA Energy Inc.'s first quarter report also noted a net loss of $33.6 million, compared to net income of $35.6 million for the same period last year.

    "The first quarter of 2008 has been the most challenging in the company's history due to the major fire at the Big Spring refinery combined with reduced industry-wide refining margins from higher crude oil costs. The higher crude oil costs have also reduced refinery margins and resulted in limited production at our California refineries," Jeff Morris, Alon president and CEO, said in a released statement. "While the first quarter has been difficult, I am confident in our ability as an organization to meet these challenges and position our company for future growth opportunities."

    The report noted a $9.7 million after-tax loss recognized in connection with the Feb. 18, 2008, explosion and fire at its Big Spring refinery.

    "We achieved the first stage of operation at the Big Spring refinery with the restart of the crude unit in a 35,000 barrels per day hydroskimmng mode on April 5," Morris said in a released statement.

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