Cheap fuel puts Crown in red Baltimore energy firm sees earnings drop $2.2 million

August 01, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Blaming falling fuel prices, Crown Central Petroleum Corp. reported a second-quarter loss of $2.2 million yesterday, down from a profit of $7.9 million for the same period a year ago.

The Baltimore operator of two Texas refineries and 344 gasoline stations reported a loss per share of 22 cents, compared with an 82-cent gain a year earlier. Sales were $338 million, down 14 percent, from $391 million.

With profit margins squeezed by what the company said were the lowest gasoline prices in 70 years -- when adjusted for inflation -- Crown stations reported a loss of $600,000, compared to a profit of $2.6 million a year ago.

"It's good for the consumer, but not for us," said Joseph M. Coale, director of corporate communications.

Operating profits at Crown's refineries declined 59 percent, from $13.5 million to $5.6 million.

The company said it suffered from long positions in crude oil, during a quarter when West Texas Intermediate crude averaged $14.63 per barrel, reaching its lowest level in almost 12 years.

In effect,Crown suffered because of crude inventory it bought when prices were higher.

"You're buying for future delivery in a wildly volatile market," Coale said. "When prices go down, you die."

The company was also hurt by "operational disruptions," including an April explosion at its refinery in Tyler, Texas, and a leak in machinery that produces high octane gasoline at its refinery in Pasadena, Texas.

The poor earnings report came at a time when the 250 workers locked out of Crown's Pasadena refinery for about 30 months stepped up their campaign against the company.

The union campaign includes charges of illegal pollution and job discrimination that the company denies. As part of the campaign, the Oil, Chemical and Atomic Workers union organized pickets at 12 Crown stations Wednesday and nine days ago started a radio advertising campaign against Crown.

"I think there's been a real pickup of boycott activities in the Baltimore area," said Eric Scherzer, international representative for OCAW. "The message is getting out about the company's practices."

But Coale said there's no indication that the boycott is having any effect on Crown sales.

"What we're seeing here is an intensely competitive market," he said.

Crown shares rose 6.25 cents, to close at $11.75 in trading yesterday.

Pub Date: 8/01/98

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.