Crown loses $1.12 a share

Baltimore firm blames $11 million loss on low refining margins


July 30, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Crown Central Petroleum Corp., which has posted losses in seven of the past eight years, reported a second-quarter loss yesterday of $11 million, or $1.12 per share, vs. a $2.2 million loss, or 22 cents a share, in the comparable quarter last year.

The Baltimore gasoline refiner and retailer had revenue of $281 million, compared with $339 million in the second quarter of 1998.

Crown blamed the loss in large part on low refining margins -- the difference between what it costs to purchase and refine crude oil and the amount made on sales of the finished product. Industrywide margins in the Gulf Coast, where Crown does most of its wholesale business, averaged $1.70 per barrel in the second quarter compared with 1998's second-quarter average of $3.76 per barrel.

"When margins are good we do very, very well and when they are not good we don't do so well," said Crown spokesman Joseph Coale.

Crown operates two Texas refineries with a combined capacity of 152,000 barrels per day, and 348 gasoline stations.

For the first six months of the year, the company had a net loss of $22.9 million on revenue of $507 million, compared with a net loss of $15.9 million on revenue of $667 million in the first half of 1998.

Crown is not alone in its disappointing results. Tosco Corp., a leading independent refiner in Connecticut, saw net income for the quarter fall 15 percent, while refiner Ashland Inc. of Covington, Ky., saw profit drop 30 percent, though both posted profits.

Blake Eskew, a senior principal at Purvin and Gertz Inc., a Houston energy consultant, said it is probably the worst year in five years for refining margins.

"Crude-oil prices have risen faster than refined-product prices," he said. "It will take some time for the market to readjust, but we do expect recovery of margins by the end of the year."

The company also lost about $4 million because of wind and storm damage that sharply cut production at its refinery in Pasadena, Texas.

The company did, however, see improvement on its retail marketing side, with a profit of $3.7 million in the quarter compared to a loss of $500,000 in the same period last year. Comparable-store merchandise sales were up 5 percent for the quarter.

Crown announced in February it had hired Credit Suisse First Boston's Energy Group to help in "evaluating strategic alternatives," which could include the sale of all or part of the company.

Coale said Credit Suisse's evaluation is still in progress and that a report is expected in four to six weeks.

A final deal, which could make Crown a buyer or seller and possibly involve trading assets with another company, is expected by the end of the year, Coale said. Crown might, for example, trade assets allowing it to act as a refinery for a group of convenience stores.

Crown's B shares, which traded as high as $37 a decade ago, were unchanged yesterday at $8.25, down from a 52-week high of $12.125.

Pub Date: 7/30/99

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