Crown loses $3.6 million in quarter Refiner blames high crude prices

November 01, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

Crown Central Petroleum Corp. yesterday blamed high prices of crude oil for a third-quarter loss of about $3.6 million.

The Baltimore company's loss for the quarter that ended Sept. 30 compares with $300,000 in net income for the corresponding period in 1995. On a per-share basis, Crown lost 37 cents, compared with a net income of 3 cents per share a year ago.

"It's better than I thought they would do," said William D. Hyler, a New York-based analyst for Oppenheimer & Co. "The refining markets were difficult this quarter with oil prices rising. We expected the company to report a loss."

Company officials said crude oil prices were driven higher for several reasons, including unrest in the Middle East. "Gasoline and distillate prices lagged the dramatic crude oil price increase," said Henry A. Rosenberg Jr., chairman and CEO.

Crown's total revenue for the quarter was $455.7 million, up 24 percent from $367.1 million a year ago.

But, because of rising prices, the company's method of valuing inventory on a last-in, first-out basis hurt quarterly earnings by $4.3 million. When prices were falling in the corresponding quarter last year, the method boosted earnings by $1.6 million.

Here's how it works: If Crown buys a barrel of crude for $20 and sells the refined gasoline for $23, the company wouldn't necessarily view the sale as giving it a $3 profit.

Instead, it would measure the $23 revenue against the price of a barrel at the time the gasoline is sold. So, if the price increased from $20 to $23, Crown would count the profit as zero.

Crown reported a quarterly profit from its refining operations of $1.8 million, compared with a $2.7 million loss in the year-earlier quarter. The company's quarterly retail net profit was $5.7 million, the same as last year.

For the nine months that ended Sept. 30, Crown's net loss was $13.6 million, or $1.40 a share, compared with net income of $400,000, or 4 cents a share, for the first nine months of last year. Sales for the nine-month period rose 16 percent to $1.26 billion.

Pub Date: 11/01/96

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