Sunoco To Expand US Coking Business With Plans To Go Global
30 4월 2010 - 8:51AM
Dow Jones News
Sunoco Inc. (SUN) top executives announced plans Thursday to
expand the company's U.S. coking operations and is in early
discussions to expand overseas.
Sunoco's coke business earned $37 million in the first quarter.
Across its operations, the company posted a loss of 53 cents a
share during the first quarter, down from a profit of 10 cents the
year before. Analysts surveyed by Thomson Reuters expected a loss
of 10 cents.
The Philadelphia-based company is expanding coking operations as
its core oil refining business continues to struggle. Oil refiners
in the U.S. saw highly profitable operations bleed money over the
past year as oil prices rebounded while demand for gasoline,
distillates and other products fell sharply. The poor economic
environment forced Sunoco to shut an East Coast refinery and sell
one in Oklahoma last year.
During a conference call late Thursday afternoon, top Sunoco
executives identified the coal business as an attractive growth
area amid an ongoing effort to cut overhead costs and improve
returns. They are eyeing opportunities to expand abroad, but those
plans are still in early stages.
"We're starting to have conversations in select places around
the world outside of the U.S. about opportunities," said Brian P.
MacDonald, Sunoco's chief financial officer. "There's really
nothing specific to talk about, but we see some good opportunities
there and we see some good interest from steelmakers."
Sunoco maintained its net income guidance for 2010 at $125
million to $140 million for the coking business, with the
expectation that improving coal prices and lower costs will help
offset the negative impact of the various operational challenges in
the coal business.
The coking facility in Granite City, Ill, has been in start-up
mode through the first quarter, but "we continue to work through
some challenges within the operations that have caused our ramp-up
to be slower than planned," said Brian P. MacDonald, Sunoco's chief
financial officer, in a conference call Thursday.
Sunoco said it would expand production of high-quality coal at
its Jewell mining facility in Virginia by 40% a year, to an
annualized rate of 1.755 million tons by late 2012. This project
will cost $25 million over the next four years. "We would initiate
the project in the current quarter, starting with the training of
new miners," MacDonald said. Jewell will start to see higher output
next January.
MacDonald said the expansion project to have a "slightly
negative impact" on 2010 and 2011 income.
Sunoco also began construction of a coke facility in Middletown,
Ill, in early April and is expected to begin production in the
second half of 2011. Sunoco has a deal to provide coke and power to
AK Steel Holding Corp. [AKS] over a 20-year period.
Shares were up 0.3% at $31.50 recently in electronic trading.
The stock is up 18% this year.
-Naureen S. Malik, Dow Jones Newswires; 212-416-4210;
naureen.malik@dowjones.com
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