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Tesoro 2Q net falls along with selling prices

SAN ANTONIO (AP) -- Refining and gasoline-selling company Tesoro Corp. said on Thursday that its second-quarter net income fell 41 percent as profit margins shrank at both its refineries and in its retail businesses.

The company earned $227 million, or $1.64 per share, for the quarter that ended June 30. Earnings a year earlier were $387 million, or $2.75 per share.

It said it would have earned $1.56 per share if not for special items.

Revenue rose 21 percent to $8.9 billion, from $7.33 billion a year earlier.

Analysts surveyed by FactSet were expecting a profit of $1.42 per share on revenue or $7.62 billion.

It said its operating earnings shrank because of "significant" work done at its refineries, and a decline in crude oil discounts.

Tesoro's refining unit boosted its refining to 624,000 barrels per day, compared to 523,000 a year ago. But its margin on each barrel dropped to $11.38, from $14.53 at the same time last year, as average selling prices dropped to $115.93 per barrel for its refined products, down from $124.54 a year earlier.

Its retail businesses saw fuel volumes rise 60 percent compared to a year earlier as it added 835 dealer-operated ARCO stations on June 1, and it added 174 Thrifty Oil Co. stations in the second and third quarters last year. It said sales at stores open at least a year rose about 3 percent.

Also Thursday, Tesoro announced that it would pay a quarterly dividend of 25 cents per share on Sept. 13 to shareholders of record on Aug. 30.

Tesoro's shares were up 26 cents at $58.01 in aftermarket trading following the release of the earnings report.