Crown blames high costs of crude for quarterly loss; Chairman notes positive cash flow from operations; $6 million in red ink; Oil refining


Crown Central Petroleum Corp. said yesterday that rising prices for crude oil contributed to the Baltimore-based refining company's third-quarter net loss of $6 million, or 61 cents a share.

The loss compares with a profit of $3.1 million in the year-ago quarter. Sales for the three months that ended Sept. 30 were $360 million, up from $312.5 million in last year's period.

Crown has posted losses in seven of the past eight years.

"Despite the operating loss reported for the quarter we experienced very positive cash flow from operations," said Chairman Henry A. Rosenberg Jr.

The company's cash flow for the quarter was $33 million, up from $14 million last year.

Crown also said its per-barrel margin of $4.54 was better than the Gulf Coast average of $4. But it wasn't enough to stem the loss.

J. Steven Wise, a spokesman for the refiner, said crude oil prices averaged $21.72 a barrel in the third quarter, up 53 percent from last year's third-quarter average of $14.18 a barrel.

"The product cost is rising, but the margin at the other end of the line is not rising proportionately," he said, noting that increases in prices at the pump tend to lag behind rises in crude prices.

Shares of Crown closed at $5.375 yesterday, up 6.25 cents. The stock, which reached $20.3125 in November 1997, hit a seven-year low of $5.3125 Wednesday.

Wise said Credit Suisse First Boston's Energy Group, which Crown hired in February to help evaluate "strategic alternatives" for the company, is evaluating options. He said Credit Suisse has no deadline to produce recommendations, which could include selling all or part of the company.

Finding a buyer won't be easy, said Jon Kyle Cartwright, senior fixed-income analyst at Raymond James.

"Their large refinery, which is still small by industry standards, is worth about $120 million, but I'm not sure there's anyone who wants to buy it," he said. "The smaller refinery I don't think has any value."

Crown has refineries in Pasadena, Texas, which can process 100,000 barrels a day, and one in Tyler, Texas, with a capacity of about 52,000 barrels a day. It operates 331 gasoline stations and convenience stores.

Cartwright said more complex refineries have a huge advantage over "plain vanilla" refineries, such as Crown's, because they are able to buy cheaper, lower-grade crude oil and process it into a product that will bring the same amount of money that product from more expensive crude would.

"The cost to upgrade facilities often exceeds the value of the facility," he said, "and as a result it is generally economically unfeasible to upgrade small refineries of the size that Crown Central owns."

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