Two of the country’s biggest propane retailers have announced their end of year results, blaming a weak economy and high commodity prices for reduced profits.
AmeriGas Partners and Suburban Propane Partners both reported their Fiscal 2011 results last week. AmeriGas recorded net income of $138.5 million – down from $165.2m the previous year. Suburban Propane recorded net income of $113.5m – down from $120.7m the previous year.
AmeriGas says it is the nation’s largest retail propane marketer, serving 1.3 million customers in all 50 states from nearly 1200 locations.
Chief executive Eugene V. N. Bissell said retail propane sales fell to 874.2 million gallons from 893.4 million gallons, “primarily due to an early end to the heating season in AmeriGas’s southern regions and customer conservation.”
“Our team did an excellent job of managing the business through challenging conditions brought about by erratic winter weather patterns and a high-cost commodity environment in fiscal 2011.”
Bissell said the company’s ambitious move to acquire Heritage Propane from Energy Transfer Partners in a multi-billion-dollar deal would make AmeriGas a stronger and more diverse company, creating “significant long-term value for our unitholders.”
Suburban Propane serves 750,000 residential, commercial, industrial and agricultural customers through more than 300 locations in 30 states.
President and chief executive Mike Dunn said Fiscal 2011 had proven to be as challenging as the company had predicted, with tough economic conditions driving energy conservation by consumers.
“The weak economy combined with persistent high commodity prices continue to put pressure on both volumes and margins.”
Retail propane sales in the 2011 year fell 19 million gallons to 298.8 million gallons.
“Looking ahead, with the absence of any real growth in the economy, stubbornly high unemployment and persistent high commodity prices, we fully expect the pressure on volumes and margins to continue throughout fiscal 2012,” Dunn said.
“In particular, as these macro factors persist, consumers are becoming more and more mindful of their overall household budgets, thus driving the potential for added energy conservation.”