Sunoco 2009 Annual Report Download - page 3

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To Our Shareholders:
A very poor market environment led to disappointing financial results for Sunoco in 2009. Excluding
special items, Sunoco ended the year with a loss of $37 million*.
While we entered 2009 expecting a challenging market for petroleum and chemical products, the depth
and scale of the global economic downturn and its impact on our industry were even greater than
anticipated. Our refining and chemicals results were significantly impacted in 2009 by weak demand and
rising feedstock costs. However, we managed to produce strong earnings in our other businesses as a result
of good execution and a sharp focus on costs. We also successfully executed our business improvement
initiative, exceeding the targeted $300 million in cost savings on an annualized basis by the end of 2009. In
addition, the Company took action on several other strategic initiatives including the shutdown of the Eagle
Point refinery, and the divestments of the Tulsa refinery and Retail Heating Oil business. We also reached
agreement to sell the polypropylene business around the end of the first quarter 2010. We modified our
retirement benefit plans effective June 30, 2010 to freeze pension benefits for most participants and to phase
down or eliminate postretirement medical benefits. Finally, we reduced our dividend, effective in the first
quarter 2010, resulting in a yield more in line with peer companies and preserving cash for other strategic
business needs. Despite the weak economy, we effectively managed working capital and maintained a
relatively strong financial position.
Non-refining businesses continue to deliver strong results
The challenging market in 2009 served to demonstrate the value of our non-refining businesses. These
businesses contributed earnings of $363 million in the aggregate, more than offsetting the $313 million loss
recorded by our Refining and Supply business and essentially breakeven results of our Chemicals business.
Retail Marketing earned $86 million during the year as Sunoco’s strong branded presence continued to
serve us well in the marketplace. Our Retail Portfolio Management program also continued to generate
significant cash divestment proceeds as the Company selectively reduced its invested capital in Company-
owned or leased sites.
Logistics earned $97 million due to another record contribution from Sunoco Logistics Partners L.P.
(NYSE: SXL) as the business continues to grow both organically and through acquisitions.
SunCoke Energy also achieved another record year, earning $180 million in 2009. During the fourth
quarter, we began operations at our newly constructed facility in Granite City, Illinois, continuing the
business’ growth strategy.
Safe, reliable, and environmentally sound operations
Our financial success has always been built upon a foundation of safe, reliable, and environmentally
sound operations. Delivering excellence in health, safety and environmental performance continues to be a
core value and top priority.
In 2009, Sunoco’s performance in these areas was mixed. While the Company had its best historical
environmental performance in spill management, its results in other key areas, such as water and air
exceedences, as well as personal safety, fell below expectations. These are areas that will receive closer
attention in 2010.
The long term: Where is Sunoco going?
Sunoco entered 2010 stronger, leaner and more competitive than it was a year ago. As a result, we are
better positioned to meet the challenges of the future and continue to deliver value to our shareholders.
With our well integrated network of refineries, pipelines, terminals and retail locations, Sunoco’s goal
is to be the premier provider of transportation fuels in the Northeast and near Midwest. Within our primary
footprint, our goal is to beat all competitors—operationally and commercially.
To reach this goal, Sunoco will be looking for opportunities to invest more in our strong regional brand
and our logistics business, including potential acquisitions. Whatever the fuel of the future turns out to be,
consumers will need convenient places to obtain it.
*In 2009, Sunoco reported a net loss attributable to Sunoco, Inc. shareholders of $329 million, which includes a net charge for
special items of $292 million.