Ohio-based independent oil refiner and marketer
Marathon Petroleum Corporation
) reported better-than-expected fourth quarter 2012 profits
attributable to favorable market conditions and increased
earnings in all its segments.
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Marathon Petroleum reported earnings per share (adjusted for
special items) of $2.26 in the fourth quarter of 2012, ahead of
the Zacks Consensus Estimate of $2.09.
Compared with the year-ago period, Marathon Petroleum's per share
earnings improved considerably (from a loss of 21 cents to a
profit of $2.26) - on the back of strong refining margins and
profitability in the Pipeline Transportation segment.
Revenues at $20.7 billion were up 6.5% year over year and
surpassed the Zacks Consensus Estimate of $20.2 billion.
For its fiscal year ended Dec 31, 2012, Marathon reported per
share adjusted profits of $9.79, above the Zacks Consensus
Estimate of $9.66 and also higher than the 2011 adjusted earnings
of $6.72 per share. Revenues of $82.5 billion were 4.7% above the
prior year and also managed to beat the Zacks Consensus Estimate
of $81.2 billion.
Refining & Marketing
: Margins in the refining business increased from the
Marathon Petroleum's refining and marketing unit earned $1.1
billion during the quarter, compared with a loss of $182.0
million in the year-ago period - reflecting higher gross margins.
The company's realized gross refining and marketing margin of
$9.17 per barrel was more than the year-ago period's margin of 39
cents per barrel. Total refined product sales volumes increased
(by 4.7%) from the year-earlier level to 1,686 thousand barrels
per day, while throughput improved 5.6% year over year to 1,448
thousand barrels per day.
: Income from the Speedway retail stations totaled $77 million
during the quarter, up slightly from $73 million in the year-ago
period. The positive comparison was driven by increased gasoline
and distillate gross margin as well as higher merchandise gross
margin partially offset by high expenses related to increased
number of stores.
: Segment profitability for the most recent quarter was $72
million which increased 89.5% from the fourth quarter of 2011.
Higher pipeline affiliate earnings and increased transportation
tariffs aided the growth.
Capital Expenditure & Balance Sheet
During the quarter, Marathon Petroleum spent $379 million on
capital programs (50.70% on Refining). As of Dec 31, 2012, the
company had cash and cash equivalents of $4.9 billion and total
debt of $3.4 billion, with a debt-to-capitalization ratio of 22%.
For its fiscal year ended Dec 31, 2012, Marathon returned about
$1.76 billion to shareholders by way of dividend and share
repurchase programs. The board of directors' also increased
outstanding share repurchases authorization to $2.65 billion.
Spun out of parent
Marathon Oil Co.
) in June 2011, Marathon Petroleum is a leading refiner and
marketer of petroleum products in the U.S.
The stock retains a Zacks Rank #2 (Buy). The company's financial
flexibility and strong balance sheet are real assets in this
highly uncertain economy. A major advantage for the company is
its proprietary access to pipelines, which inhibits lower-cost
competitors from supplying to Marathon Petroleum's key markets.
Marathon Petroleum finished its $2.2 billion Detroit Heavy Oil
Upgrading Project. The completion of the project will not only
deliver an extra 80,000 barrels a day of heavy oil processing
capacity but will also free up capital expenditures and boost the
company's free cash flow.
Additionally, the company's proposed purchase of
) Texas City refinery - one of the largest and most complex in
the country - will help the company to solidify its position in
the fuel export business, apart from improving production
Another target achieved by Marathon was the initial public
offering (IPO) of midstream master limited partnership
). The new units started trading on Oct 26, 2012.