Crown Central Petroleum Corp., blaming its $5.9 million plunge into the red during the first quarter of the year on repair costs associated with a Houston refinery, should be back in the black by the middle of the year, its chairman says.
Crown, which survived the Persian Gulf crisis better than many expected, was caught in an unexpectedly long renovation of its largest gasoline production unit. The two-month outage reduced gasoline production during the first quarter by 35 percent compared with the same period a year earlier.
"Our results would have been positive had it not been for the refinery problem," said company chairman Henry A. Rosenberg Jr., in an interview after Crown's annual meeting yesterday at its Baltimore headquarters.
He said refinery operations have returned to normal and that "significant improvement" is expected in the second quarter results.
The first-quarter loss of 61 cents a share -- Crown's first in 11 quarters -- compared with a profit of $1.1 million, or 12 cents a share, in the first quarter of 1990. Revenues were $419 million, down 31 percent from the year earlier period.
Lower demand and tighter profit margins also contributed to the loss, but the Persian Gulf war had only an indirect impact on the company, officials said. Many industry observers predicted that refiner-marketers like Crown would be caught in a squeeze between higher crude oil prices and pressure to keep retail prices down.
Oil companies that operate their own wells benefited from the higher oil prices more than refiners that have to process oil purchased from suppliers. But Rosenberg said Crown's wholesale profit margins held up.
Crown closed out 1990 with a profit of $26 million, up 24 percent from the $21 million reported in 1989. Sales topped $2 billion for the first time in the company's history. Some of the increase was attributed to the first full year of operation from the La Gloria refinery in Tyler, Texas, which Crown purchased in 1989.
"With the exception of a fire at our Houston refinery, 1990 was good year," Rosenberg said.
The company has reached a tentative agreement to purchase 14 new gasoline stations in Virginia from Ashland Oil Inc., part of a Virginia expansion that Rosenberg would like to see continued. At the same time, Crown is closing unprofitable stations -- more than 100 last year.
Rosenberg predicted some increase in gasoline prices for consumers as the summer travel season gets under way. Prices in Baltimore for self-serve unleaded gas will probably hit about $1.10 a gallon, he said.
"I think they will be basically pretty stable for a while," he said.
Rosenberg also warned shareholders that changes in the federal Clean Air Act may be expensive for the company. The new laws require the development of cleaner burning fuel.