(RTTNews) - Oil refining company Tesoro Corporation (TSO: News ) Monday reported a sharp decline in net profit for the third quarter, hurt by lower refining margins and a decline in throughput amid a comparatively weak commodity price environment. The company also lowered its quarterly cash dividend to $0.05 per share from the regular $0.10 per share.

For the third quarter of fiscal 2009, the San Antonio, Texas-based company's net earnings were $33 million or $0.24 per share compared to $259 million or $1.86 per share in the prior-year period.

On an average, 19 analysts polled by Thomson Reuters expected Tesoro to earn $0.01 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter plunged to $4.74 billion from $8.68 billion in the third quarter of fiscal 2008. Analysts expected the company to generate revenues of $4.71 billion for the quarter.

Tesoro operates seven refineries in Western US with a combined rated crude oil capacity of nearly 664 thousand barrels per day. The company has two segments: refining and retail. The refining segment processes both heavy and light crude oils and produces primarily gasoline and gasoline blendstocks, jet fuel, diesel fuel, and heavy fuel oils. It also manufactures other refined products, including liquefied petroleum gas, petroleum coke and asphalt.

The company's retail-marketing system includes over 870 branded retail gas stations, of which more than 380 are company-operated under Tesoro, Shell, Mirastar and USA Gasoline brands.
Segment operating income for the third quarter plunged to $137 million from $510 million in the corresponding period prior year, negatively impacted by lower gross margins. The company's realized gross margin was down $7.10 per barrel from the prior year's $9.59 per barrel, due to lower margins for distillates and narrowing differentials for heavy crudes.

Refining segment operating income for the quarter fell sharply to $84 million from $476 million last year. Retail segment operating income increased to $53 million from $34 million in the prior-year quarter.

Refined product sales margin for the period was $7.24 per barrel versus $13.38 per barrel, as average sales price declined to $83.71 from $131.21 in the third quarter of 2008. Total refined product sales margin includes margins on sales of manufactured and purchased refined products and effects of inventory changes.

During the three-month period, Tesoro had a one-time loss of $3 million with regard to foreign currency exchange. Costs of sales and operating expenses for the quarter declined to $4.49 billion from $8.05 billion, and selling, general and administrative expenses were $55 million versus $68 million in the 2008-year period. Loss on asset disposals and impairments for the period narrowed to $4 million from $14 million a year earlier.

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