Crown profits double in 4th quarter

March 01, 1991|By Liz Atwood | Liz Atwood,Evening Sun Staff

Baltimore-based Crown Central Petroleum reports that its profit more than double in the fourth quarter.

Chairman Henry A. Rosenberg Jr. said the results represent "solid performance during a highly volatile market and a weakening U.S. economy."

The company yesterday reported net income of $7.3 million, or 75 cents a share, on sales of $608 million in the last three months in 1990, compared with $3.1 million, or 32 cents a share, on sales of $496 million during the year-ago period.

For the year, the company reported income of $26 million, or $2.65 a share, on sales of $2.1 billion compared with $21 million, or $2.09 a share, on sales of $1.4 billion in 1989.

Crown cited "record growth in revenues" due to its La Gloria Oil and Gas Co. subsidiary. Acquired in 1989, the subsidiary includes a refinery and pipeline that pumps gas to the Midwest. Earnings in 1990 reflect the first full year of La Gloria's contribution to revenues.

Crown, a refiner-marketer, does not produce its own crude oil. It said it was hampered by the higher prices it had to pay for crude amid the "violent swings in the costs of raw materials and product prices" caused by the Persian Gulf crisis.

After Iraq's Aug. 2 invasion of Kuwait, crude oil prices surged from about $21 a barrel to record highs of around $40. And gasoline prices did not increase at the same rate, said William Snyder, senior vice president of administration.

"You had a squeeze on the profit margin," Snyder said.

A third factor which negatively affected earnings was a reduced demand for gasoline. U.S. gasoline prices peaked at $1.4709 on Oct. 19, and consumers began changing their spending habits. Rather than purchasing premium and mid-grade gasolines, they switched to lower grade gasolines that have smaller profit margins for oil companies. A 5-cent-a-gallon federal tax increase that went into effect Dec. 1 further encouraged consumers to cut back their gas usage.

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