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Earnings

HollyFrontier posts bigger-than-expected loss on weak demand

(Reuters) - U.S. refiner HollyFrontier Corp reported a bigger-than-expected quarterly loss on Wednesday as renewed COVID-19 travel restrictions sapped fuel demand, sending its shares nearly 2% lower.

A resurgence in coronavirus cases globally has led to a new wave of curbs, piling pressure on refiners as they also deal with rising crude prices and higher costs related to the blending of renewable fuels into their products.

Dallas, Texas-based HollyFrontier’s refinery gross margins plunged 18.5% sequentially to $4.02 per barrel produced in the fourth quarter.

The company’s quarterly refinery throughput, or the amount of crude processed, fell nearly 2% from the previous quarter to 412,780 barrels per day (bpd).

HollyFrontier forecast first-quarter output of between 350,000 bpd and 380,000 bpd, lower than the 471,560 bpd it churned out a year earlier before converting a 52,000 barrels per day refinery in Cheyenne, Wyoming into a renewable diesel plant.

The pandemic has accelerated refiners’ plans to increase investments in renewable fuels, with HollyFrontier raising its full-year 2021 renewable spending forecast to between $520 million and $550 million, from $500 million to $530 million.

Like larger rivals Valero, Phillips 66 and Marathon Petroleum, HollyFrontier said it expects COVID-19 vaccine distribution to fuel a recovery in demand.

“We expect demand for transportation fuels will strengthen as COVID-19 vaccines are distributed and the global economy recovers from the pandemic,” Chief Executive Officer Michael Jennings said.

Its adjusted net loss was 74 cents per share for the three months ended December, compared with analysts’ estimates of a 71 cents per share loss, according to Refinitiv IBES data.

The company’s results were also weighed down by a 5.6% sequential jump in total operating costs and expenses to $3.01 billion.

Reporting by Arunima Kumar in Bengaluru and Laura Sanicola in New York; Editing by Aditya Soni

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