Sunoco 2004 Annual Report Download - page 5

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3
Sunoco sites but retaining the sales volumes
through long-term dealer or distributor contracts.
These strategic initiatives have resulted in a bigger,
stronger retail portfolio with little change in our
net investment.
Coke and Logistics, our most ratable businesses,
earned $40 million and $31 million, respectively,
and continue to offer significant value and growth
potential for the Company. In 2004, Sunoco
Logistics Partners L.P. (NYSE: SXL) unit value
increased 17 percent, and annual cash distributions
increased by $0.40 per unit (20 percent).
Acquisitions and expansion capital totaled $65
million, and a successful equity offering was
completed in April 2004. In Coke, we are on
schedule to begin production at a new 550,000
tons-per-year cokemaking plant in Haverhill, Ohio
in March 2005 and construction is underway for a
joint-venture plant in Vitória, Brazil that is expected
to be operational in 2006.
We view the diversity of our business portfolio as
a key strength of the Company, with each business
offering good returns and growth prospects. In
addition to realizing all we can from Refining and
Supply, a key element of our strategy is to maximize
income from the non-refining businesses to
moderate volatility in the Company’s earnings. We
expect to continue to grow the earnings power of
these non-refining businesses.
• Our acquisition activity over the past two years has
been crucial to our success in 2004. The Eagle
Point refinery, the Speedway and ConocoPhillips
retail sites, and the Equistar Chemicals transaction
contributed $190 million, or 30 percent, to our
2004 income before special items. These
acquisitions, which totaled only $800 million,
have added significant earnings power to the
Company in 2004 and will have an impact going
forward. We will continue to be opportunistic and
disciplined as we pursue additional growth
across our business portfolio.
Sunoco 2004 Highlights
• Income before special items* a record $629 million, or
$8.40 per diluted share
• Sector-leading Return on Capital Employed of 21.7
percent (based on income before special items)**
• Share price increase of 60 percent, reaching new
record highs
• Best overall operating and Health, Environment and
Safety performance
• From 2000 to 2004, refinery production up 18 million
barrels, excluding Eagle Point refinery acquisition
• Acquisitions in 2003 and 2004 contributed $190
million to 2004 income before special items
*Net income for 2004 amounted to $605 million, which includes net charges for special
items of $24 million.
**ROCE for 2004 (based on net income) was 21.0 percent.
• New 550,000 tons-per-year cokemaking facility in
Haverhill, OH scheduled to begin production in March
2005; signed contract and began construction for joint-
venture plant in Brazil
• Approximately $425 million of proceeds generated
through portfolio management and divestment activities
• Increased annual dividend from $1.20 to $1.60 per
share in 2005 after an increase from $1.10 to $1.20
per share in 2004
• Repurchased 8.0 million shares of common stock,
reducing outstanding shares by 8 percent
• Restructured outstanding debt lowering pretax interest
costs by $20 million in 2005