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PHILADELPHIA -- Sunoco, Inc., operator of more than 700 convenience stores and gas stations, today said its convenience store retail marketing division earned a company-record $36 million in the second quarter.
Increased springtime gasoline demand and some moderation in crude oil and wholesale gasoline prices contributed to much improved margins during the quarter, said John Drosdick, Sunoco's chairman and chief executive. Year-to-date in 2003, retail marketing has earned $46 million -- a strong contribution during a period of less-than-average gasoline demand growth for the industry.
"Except during periods of steadily rising crude oil and wholesale gasoline prices, we believe this business will continue to provide Sunoco good earnings and returns on invested capital," Drosdick said.
Average retail gasoline margins for the second quarter were 11.6 cents per gallon, up 2.4 cents per gallon compared to the prior-year quarter. Also contributing to the improvement were higher retail distillate margins and 3 percent higher gasoline and distillate sales volumes. Partially offsetting these positive factors were higher expenses, the company said.
For the second quarter, Sunoco reported net income of $81 million versus net income of $9 million for the 2002 second quarter. For the first half of 2003, Sunoco reported net income of $167 million versus a net loss of $98 million for the 2002 first half.
Despite downward pressure on margins during much of the period, Sunoco's refining and supply division earned $50 million in the second quarter. "Operating performance was excellent across our refining system," Drosdick said. "We ran our crude and conversion units at near capacity levels and did a good job optimizing production yields. With increased gasoline demand, low distillate inventories, and new gasoline specifications on the horizon, we believe the prospects for continued better-than-average refining margins into 2004 are good."
On the strategic front, Sunoco said it plans to continue to work to upgrade its asset portfolio. In June, the Philadelphia-based oil company completed the acquisition of 193 conveneince stores and gas stations in the southeast from Speedway. The company is also in the process of selling its interests in 190 stores in the Midwest. "Our expectation with respect to the sites to be sold in Ohio and Michigan is to continue to supply the outlets through new agreements with Sunoco distributors," Drosdick said.