Refining makes for rough quarter at Delek

Retail division sees more stable regional economy

Email | Print By Geert De Lombaerde

Delek US Holdings posted a surprise third-quarter loss Thursday morning as the difference between prices for crude oil and its refined products narrowed significantly.

Brentwood-based Delek, the parent company of Mapco, lost $4.8 million on sales of $818 million last quarter. A year ago, those numbers were $25.4 million and $1.4 billion, respectively. Operating losses were $2.2 million versus of a profit of almost $45 million last year, while diluted per-share losses were 9 cents – 13 cents below analysts' average forecast.

“Challenging Gulf Coast refining economics weighed heavily on our overall profitability during the third quarter 2009,” said CEO Uzi Yemin, who added that margins on the company's refined product plunged in September.

Excluding incoming cash related to accident-related damages at its Texas refinery, Delek's refining segment lost $3.4 million last quarter versus a profit of $4.0 million in Q2. That trend – which also affected other refiners during the quarter – overshadowed improvements in Delek's retail segment, where margins rose to 4.6 percent from 2.9 percent in the spring.

"Same-store fuel gallons sold and same-store merchandise sales increased in the third quarter 2009, following more than a year of negative same-store comparisons," the company said in its statement. "Same-store metrics have improved due primarily to a combination of lower fuel prices, improving consumer confidence and perceived stabilization in employment conditions in the Company’s core Tennessee and Georgia markets."

Investors appear to be focusing more on those positives: At about 12:30 p.m., shares of Delek (Ticker: DK) were up almost 5 percent at $7.02. Year to date, they're up by about a third.