Crude prices "created very challenging market conditions in the first quarter" Lynn L. Elsenhans, Sunoco's chief executive officer, said in a statement.
Sunoco suffered a double whammy during the quarter when its Delaware River refineries shut down for sustained outages from mechanical failures. The Philadelphia refinery reportedly suffered two fires in March.
"Clearly this situation is not acceptable and we have taken a number of steps," said Elsenhans, speaking in a conference call. She said the outages concluded in April and the refineries are now up and running.
Sunoco's loss amounted to 84 cents a share compared to a 53-cent-per-share loss during the first quarter of 2010. Excluding special items, Sunoco had a loss of $122 million, or $1.01 a share, for the quarter vs. first quarter 2010 income of $17 million, or 14 cents a share.
Sunoco reported its earnings after markets closed, and the losses were greater than most analysts anticipated. The company's refining and supply unit reported a pretax loss of $138 million.
Company shares had closed down 47 cents, or 1.16 percent, at $40.06, and fell further in after-hours trading.
The tough business climate at the refineries seems to reinforce Elsenhans' strategy to make Sunoco less dependent upon the low-margin refining business and more reliant on profits from retailing, convenience stores and logistics.
Sunoco is handicapped because its refineries depend upon supplies of West African sweet crude when such petroleum costs as much as $16 a barrel more than high-sulfur West Texas crude. Since Sunoco competes with refiners that can import fuel from overseas or by pipeline from the Gulf Coast, its margins are under pressure.
Elsenhans said some management changes had occurred in response to the outages, but that the company did not plan to shut the refineries and convert them into fuel terminals.
"Right now we believe that continuting to run them is the best option," she said.
Sunoco has been selling assets, such as its chemicals unit and its Toledo refinery, to focus on its retail and logistics businesses, which earned $43 million in the quarter.
"We finished the quarter with approximately $1.5 billion in cash, which gives us strategic flexibility to further pursue our growth plans," Elsenhans said.
The SunCoke Energy subsidiary, which is being spun off as separate company whose stock will be largely controlled by Sunoco, earned pretax income of $9 million.
The company also reported $57 million in onetime gains from the sale of its Toledo refinery.
Contact staff writer Andrew Maykuth at 215-854-2947 or amaykuth@phillynews.com.
