Marathon’s 2013 revenue up 21% while profits tumble

1/30/2014

FINDLAY — After adding a new refinery to its assets while also expanding its Speedway retail operations, Marathon Petroleum Corp. on Wednesday reported its 2013 net profit fell 38 percent to $2.1 billion, or $6.64 a share, from the $3.4 billion, or $9.89 a share posted in 2012.

The Findlay refining and marketing company’s annual revenues, however, rose 21 percent to $100.3 billion from $85.5 billion in 2012.

Crude prices and refining margins weren’t as strong in 2013 but nevertheless Gary Heminger, Marathon Petroleum’s president and chief executive, was pleased with the company’s performance.

“MPC’s fourth quarter was a strong finish to a year in which we earned in excess of $2 billion,” Mr. Heminger said.

“Our 2013 earnings reflect our ability to consistently meet energy market needs through our logistical flexibility and relentless focus on top-tier operation performance,” he added.

Earnings exceeded analysts' expectations, and MPC stock rose $3.35, or 4 percent, to close at $86.52.

The CEO said Marathon continued to capitalize on the continent’s shifting energy landscape through a number of key moves, including buying BP’s Texas City refinery in Galveston Bay, Texas.

“In addition to investing in our transportation and retail segments, we completed our [$1.6 billion] acquisition of the Galveston Bay refinery in February and continued to make margin-enhancing investments in our refining system. While refining will remain our largest source of earnings and cash flow, we will augment this through expanded investments in midstream and retail in the years ahead,” Mr. Heminger said.

For the fourth quarter, Marathon had profits of $626 million, or $2.07 a share, a 17 percent drop from the $755 million, or $2.24 per share earned in the same period of 2012.

In a conference call with Wall Street analysts, Mr. Heminger noted that the company's Speedway gas station chain had an excellent year with record annual income of $375 million during 2013, compared with $310 million during 2012.

Marathon attributed the record store income to higher gasoline and distillate gross margins and a higher gross margin on merchandise sold at the company’s 1,500 locations.

Last year Marathon took a big step to increasing its Speedway operations by expanding into western Pennsylvania and Tennessee, bringing to nine the number of states the gas station chain operates in.

Mr. Heminger said Marathon has tripled the amount of money it spends per year on new and rebuilt Speedway locations, compared to the previous five-year period, and it plans to expand further in Tennessee and Pennsylvania this year.

While its profits were down somewhat compared to 2012’s bountiful year, Marathon did provide its shareholders a total share return of 48 percent, or nearly $3.3 billion in dividends or share repurchases, in 2013.

“The [48 percent total return] performance places MPC in the top third of the S&P 500 firms in total returns and follows a very strong 2012 total return of 94 percent,” Mr. Heminger said.

MPLX LP, which was spun off from Marathon Petroleum in 2012, reported revenues of $125.6 million, down 2 percent from 2012. Its stock rose 58 cents a share, or 1.2 percent, to close at $46.91.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.