Arco’s Profits Jump 76% in 1st Quarter

Buoyed largely by proceeds from the sale of a half interest in its petrochemical subsidiary, Atlantic Richfield reported Monday a 76% increase in first-quarter earnings.

Arco’s performance--at or slightly above the levels predicted by some analysts--was marked by strong profits from chemical and specialty products operations and by declines associated with its refining and marketing activities.

Arco said it earned $704 million during the first three months of 1989, compared to $401 million during the same period in 1988. The results included a $634 million after-tax gain from the sale of 53.75% of Lyondell Petrochemical Co. in a public offering in January. Arco subsequently bought back some of the shares in Lyondell and now owns 49% of the company.

Partially offsetting this gain were $345 million in after-tax charges for future environmental expenses and some write-downs, including provisions for the anticipated loss associated with the planned sale of Arco Solar Inc. Arco Solar, a subsidiary that produces solar panels, has been on the sales block since April 1988.

Total Sales Down

Total sales and operating declined to $4 billion from $4.6 billion a year ago.

Excluding the charges and the Lyondell proceeds, net income would have been $415 million, up 3.5% from the earnings for the same three-month period in 1988.

The big earnings gains were made in chemical and specialty products operations primarily associated with Arco Chemical Co., a subsidiary. Boosted by increased profits from the sale of materials used in plastic products and gasoline, earnings from chemicals and specialty products amounted to $96 million--a rise of 9%.

More modest earnings--$195 million, compared with $193 million in 1988--were generated by Arco’s oil and gas operations. Arco said it was forced to reduce Alaskan oil shipments by nearly 50% for a 12-day period at a cost of $10 million in the wake of the Exxon oil spill in Alaska on March 24.

Arco’s refining and marketing operations dipped to $17 million from a total of $87 million during the first quarter of 1988 partly because prices for finished products did not keep pace with higher crude prices during the period, according to the company.

‘Not a Bad Showing’

“It’s not a bad showing considering that most oil companies have been recording declines in refining revenue,” said Mary Anne Sudol, an analyst at Fitch Investors.

Thomas Samuelson, an analyst at Duff & Phelps, said Arco and other oil companies will see a better performance in refining and marketing operations in the second quarter because they have recently raised gasoline prices.

Meanwhile, a first quarter report released by the Houston-based Tenneco Inc., a diversified firm with energy-related operations, showed a dramatic increase in earnings. Tenneco said it had net income of $109 million, compared with $63 million for the same period in 1988.

Big gains in natural gas pipeline operations--operating income of $112 million for 1989, compared to $87 million for the same period in 1988--was a factor in the improvement, according to Tenneco.