Sunoco 2011 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2011 Sunoco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Results of Operations
Over the past few years, the Company has significantly repositioned its portfolio of businesses to reduce its
exposure to refining and chemicals margins through the sale of its Tulsa and Toledo refineries and its chemicals
operations. In addition, there has been significant capital investment to grow the logistics and retail operations.
As a result, Sunoco’s profitability has been increasingly impacted by the growth in the level of earnings in these
businesses. However, the volatility of crude oil and refined product prices and the overall supply/demand balance
for these commodities should continue to have a significant impact on margins and the financial results of the
Company during the first half of 2012.
Refined product margins declined sharply in 2009 in response to weak demand attributable to the global
recession. During 2010 and 2011, refined product margins showed some slight improvement. However, these
margins deteriorated significantly in the latter part of 2011, particularly in the northeast United States. Earnings
in the logistics business have benefited from a continued focus on growth, as well as strong results from crude oil
acquisition and marketing opportunities. Retail gasoline margins and sales volumes showed slight improvement
during the 2009-2011 period. Cokemaking profitability benefited from improved operations at its Haverhill and
Granite City facilities during the 2009-2011 period. Results in 2009 and 2010 also benefited from a favorable
coke contract primarily driven by increases in coal prices. However, this contract was restructured to eliminate
this benefit in 2011.
The Company’s future operating results may also be impacted by environmental matters (see
“Environmental Matters” below).
Earnings Profile of Sunoco Businesses (millions of dollars)
2011 2010 2009
Logistics ...................................................... $ 204 $132 $152
Retail Marketing ................................................ 169 176 146
Refining and Supply:
Continuing operations ......................................... (316) (19) (513)
Discontinued Tulsa operations ................................... — — 5
Discontinued chemicals operations ................................. 1 56 1
Coke ......................................................... 62 176 193
Corporate and Other:
Corporate expenses ........................................... (80) (108) (66)
Net financing expenses and other ................................ (101) (110) (86)
Asset write-downs and other matters:
Continuing operations ....................................... (2,607) (109) (687)
Discontinued chemicals operations ............................. (287) — (6)
Discontinued Tulsa operations ................................. 18 — (6)
Sale of Toledo refinery ......................................... 2 — —
Sale of discontinued chemicals operations ......................... 13 (169) —
LIFO inventory profits ......................................... 63 168 92
Gain on remeasurement of pipeline equity interests .................. 9 59 —
Sale of retail heating oil and propane distribution business ............. — — 44
Sale of discontinued Tulsa operations ............................. — — 70
Pretax income (loss) attributable to Sunoco, Inc. shareholders ............ (2,850) 252 (661)
Income tax expense (benefit) attributable to Sunoco, Inc. shareholders* .... (1,166) 18 (332)
Net income (loss) attributable to Sunoco, Inc. shareholders .............. $(1,684) $ 234 $(329)
*Includes tax expense (benefits) of $(99), $(96) and $26 million, respectively, attributable to discontinued operations for the years ended
December 31, 2011, 2010 and 2009.
37