Delek Group Ltd. (TASE: DLEKG) US subsidiary Delek US Holdings Inc. (NYSE:DK) reported a drop in revenue in the fourth quarter and full year of 2008, as a fire shut down its Tyler, Texas refinery for much of the fourth quarter.
Despite lower revenue, Delek US beat analysts' earnings per share estimates Excluding special items, net profit from continuing operations was $18 million, or $0.33 per fully diluted share, in the fourth quarter 2008. Analysts had expected a loss of $ 0.05 per share.
Including the special items, Delek US reported net profit from continuing operations of $500,000, or $0.01 per fully diluted share, in the fourth quarter of 2008, compared to a net loss from continuing operations of $12 million, or ($0.23) per basic share, in the corresponding quarter of 2007.
Delek US is a diversified energy company with assets in the petroleum refining, marketing, and retail industries.
The company’s Tyler refinery had a fire which occurred on Nov. 20, 2008. The refinery has been offline since the incident and is currently anticipated to resume operations in May 2009. The company has begun receiving insurance payments related to the incident.
Delek US president and CEO Uzi Yemin said, “The benefits of our diversified downstream business model were evident during 2008, positioning us to maintain profitability in a period of challenging market conditions and prolonged commodity price volatility. Our retail segment reported record contribution margin in 2008, due principally to elevated retail fuel margins during the second half of the year.”
Fourth quarter revenue from refining operations was $237.2 million, revenue from retail sales reached $322.9 million, and sales from the company's marketing segment were $97.8 million.
Delek US has decided to exit the Virginia market. At year-end, the company had sold 12 of the 36 Virginia-based stores held for sale. Retail segment contribution margin increased 63.8% to $19 million in the fourth quarter, compared to $11.6 million in the fourth quarter of 2007.
Although fourth quarter results were adversely impacted by hurricane-related supply shortages which impacted fuel sales at many retail locations early in the quarter, Delek US benefited from higher fuel margins during October and early November which served to more than offset lower sales volumes in the period. For the second consecutive quarter, retail fuel margins achieved record levels. Retail fuel margins were $0.249 per gallon in the fourth quarter, an increase of $.108 cents per gallon when compared to the fourth quarter of 2007. The increase in fuel margin served to partially offset a 6% percent same-store decline in the total number of retail gallons sold in the quarter.
Shares in Delek US rose 8.09% yesterday to $6.41, reflecting a market cap of $344.09 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 5, 2009
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