Crown Central reports better results for year

Rising crude prices help company in fourth quarter

February 25, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

Crown Central Petroleum Corp. reported improved yesterday results for the fourth quarter and the year.

The Baltimore-based refining company posted a $1.1 million loss, or 12 cents a share, in the three months that ended Dec. 31 on sales of $404 million. That compared with a loss of $16.6 million -- $1.68 a share -- on revenue of $285 million in the period a year ago.

Crown officials said the quarter was helped in large part by the fact that, in a market of rapidly rising crude-oil prices, it lowered its inventory reserve by 1.3 million barrels. The move saved the company $9.3 million.

Crown reported a positive cash flow from operations of $9.5 million vs. a negative $21 million a year earlier. For the year, cash flow from operations was a positive $52.8 million compared with a negative $24.6 million in 1998.

John E. Wheeler Jr., executive vice president and chief financial officer, said improved margins boosted the numbers.

The delayed 3-2-1 crack spread -- the margin a refiner makes when it takes three barrels of crude and makes two barrels of gasoline and one barrel of distillate -- for West Texas Intermediate averaged $3.05 last year, but Crown was making $3.24, he said.

"It was just very tight inventory management -- and maximization of the type of product that is output," Wheeler said.

In 1998, the average margin was $1.89, but Crown only made $1.59.

For all of last year, Crown had a net loss of $30 million, or $3.04 per share, on sales of $1.27 billion. In 1998, it lost $29.4 million, or $2.99 a share, with revenue of $1.3 billion.

Crude oil prices have nearly tripled since last year, but Crown said retail prices are not rising fast enough to offset higher costs. Wheeler said Crown's retail gross margin shrank to 11.6 cents a gallon in the fourth quarter from 13.1 cents a gallon in the 1998 quarter.

In the fourth quarter of last year, he said, Crown made $6 million on the sale of 14 gas stations in Georgia, which added $4.4 million to the net earnings.

Crown, which has posted losses in eight of the past nine years, hired Credit Suisse First Boston last February to evaluate "strategic alternatives," which could include selling parts or all of the company. Yesterday, officials said the evaluation is still under way, with no timetable for a report.

This month, Crown's board voted to institute a "poison pill" to make it less vulnerable to a hostile takeover. The move came after a November letter to Crown's board of directors from Paul A. Novelly, who holds slightly less than 15 percent of Crown's Class A voting shares, proposing that Crown and his company, St. Louis-based Apex Oil Co., combine.

Novelly proposed that he run the new entity for three years, ousting Henry A. Rosenberg Jr., Crown's chairman, chief executive officer and president. Crown executives have declined to comment on the offer, other than to say it would be considered.

Crown's Class A and Class B shares closed unchanged yesterday at $6.0625.

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