Retail integration benefits important: Andeavor
Houston, 9 August (Argus) — Retail and marketing was more valuable inside Andeavor's refining business than spun off to a separate company, the refiner said today.
A split was not impossible, but the company's growing portfolio of retail and wholesale brands made more sense as an integrated business, chief executive Greg Goff said on a quarterly earnings call.
"We see tremendous value in our integration between refining, marketing and logistics," Goff said. Andeavor changed its name from Tesoro earlier this year.
US independent refiners have for years faced investor pressure to separate retail and marketing businesses. Such businesses grant refiners certainty over where their production will go and a share of profits closer to consumer sales. But the business, tied up in real estate, merchandise sales and regional battles, can also prove a costly distraction.
Marathon Petroleum expects to later this quarter report on whether it will separate its Speedway retail business, a segment chief executive Gary Heminger has said makes more sense inside the company. Delek US plans to keep, for now, stores gained in its acquisition of Alon and integrated into the company's west Texas business. Delek sold its Mapco chain last year to Chilean conglomerate Copec.
Andeavor has expanded both its company-operated retail and wholesale businesses to more than 3,000 stores. Andeavor now distributes fuel through at least seven brands, and will expand its Arco wholesale flag into Mexico by October. The company in July began operating 39 northern California stores it acquired during the second quarter, in addition to the roughly 550 stores it acquired as part of Western Refining during the same period.
Andeavor can supply the California stores from its own refineries and using its controlled logistics business.
"We will continue to look for opportunities to grow the business in that way," Goff said.
The company reported a $40mn profit for the quarter, down from $418mn in the same quarter last year.