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NEW YORK -- During a conference call on Thursday, Susser Holdings Chief Executive Officer Sam Susser reported strong second quarter earnings with same store merchandise sales up 6.6 percent and a merchandise margin improvement of nearly 35 percent.
"We reported very strong numbers from our merchandise segment as well as improved retail fuel margins," Susser said during a conference call. "The merchandise margin was the highest quarterly margin since 2001."
Sales from both its Stripes stores and the Town & Country stores, acquired in November 2007, increased by 77.4 percent to $187.9 million, versus $105.9 million a year earlier for the stand-alone Susser operation, he noted.
"Consumer demand in our region continues to hold up well despite ongoing concerns about the national economy," Susser said during the conference call.
Total revenues for the combined organization increased 77.6 percent to a record $1.2 billion, from $692.8 million in the second quarter last year. Gross profit, Susser noted, increased 74 percent to $112.3 million, versus $64.6 million in the year-ago quarter from stand-alone Susser operations.
Hurricane Dolly forced the closure of 112 stores. In less than 72 hours, 92 locations were operational with the remaining locations ramping up after one week. Susser explained that the storm cost between $2 million and $3 million in capitol expenditures. The majority of the damage was due to food spoilage, signs and canopies.
In other earnings news, Sunoco’s second quarter report underscored a difficult economy with a net income of $82 million opposed to $509 million for the same time period last year.
According to the report, retail marketing was flat opposed to a second quarter income of $30 million in 2007. The decrease in earnings, the report noted, was due in large part to lower average retail gasoline margins and lower divestment gains attributable to the Retail Portfolio Management program.
"Despite a challenging market environment for refining and an unprecedented increase in crude oil prices that also squeezed retail gasoline and chemicals margins, results were improved from the first quarter due to higher refining margins that accompanied strong contributions from our logistics and coke segments," John G. Drosdick, Sunoco chairman and chief executive officer, said in a released statement.
He continued: "The refining and supply business unit earned $32 million. While gasoline margins remained weak and refinery utilization was limited by maintenance activity and economically driven rate reductions, we were able to optimize our production for the difficult market conditions."
In other related earnings news, Delek US Holdings Inc.’s second quarter report noted total revenue of $1.45 billion for the quarter ended June 30, 2008, which marks an increase of 31.4 percent compared to the second quarter 2007. However, net income declined to $4.0 million, from net income of $67.2 million for the same time period last year.
The company’s retail margin was $17.3 million compared to $18.4 million for the second quarter 2007. The report stated that second quarter retail contribution margin was affected by high retail fuel prices, increased credit card expenses and a reduction in discretionary consumer spending.
According to Uzi Yemin, president and chief executive officer, second quarter results were positively impacted by a strong distillate crack spread and fuel margin from its ethanol blending program, which resulted in higher fuel margins at the retail segment and lower cost of goods sold at the refinery.
"Although higher crude oil costs and weaker consumer demand impacted our second quarter results, each of our business segments reported positive contribution margin in the period, resulting in a return to profitability," Yemin said in a released statement. "We believe that ongoing efforts to further optimize our crude slate, grow our ethanol blending program, enhance retail margins and improve our operating efficiency should position us to remain increasingly competitive in a challenging operating environment."
Alon USA Energy Inc. also announced results for the second quarter with a net income of $18.2 million compared to $95.6 million in the second quarter 2007. On the heels of its successful acquisition of Krotz Springs, La., refinery, the company reported a net loss of $59.7 million.
"With the completion of the Krotz Springs refinery acquisition, our crude oil refining capacity increased by 50 percent to approximately 250,000 barrels per day, including four refineries located on the West Coast, West Texas and Gulf Coast," Jeff Morris, Alon’s president and chief executive officer, said in a statement. "We are very pleased with the Krotz Springs acquisition and are optimistic about the opportunities at this refinery for Alon."
In response to a less than stellar quarterly report, Morris said: "The second quarter of 2008 has seen us continue to work through the challenges related to the major fire at the Big Spring, Texas refinery on February 18, 2008 and higher crude oil costs. The higher crude oil costs have reduced refinery margins industry-wide, which has continued to limit production at our California refineries. In addition to our recovery efforts at Big Spring and the Krotz Springs acquisition, we are moving forward with the initiatives discussed earlier this year. We are proceeding with an initial public offering relating to our retail and branded marketing businesses, which we will seek to complete by year end. Additionally, we are completing the detailed engineering of the hydrocracker project at our California refineries and still expect this project to be completed by the end of 2010."