Valero Energy Q3 Profit Down 54%, But Results Beat View

(RTTNews) - Petroleum refiner Valero Energy Corp. (VLO) on Tuesday reported a 54 percent decline in profit for the third quarter from last year, as higher revenues and refining volumes were more than offset by lower refining margins. However, both revenue and adjusted earnings per share beat analysts' expectations.

Bill Klesse, Valero Chairman and CEO said, "Third quarter refining margins were challenged, but our story remains intact. Fourth quarter 2013 gasoline margins have started out seasonally weak, but distillate margins continue to be strong."

San Antonio, Texas-based Valero's net income for the third quarter was $312 million or $0.57 per share, down from $674 million or $1.21 per share in the year-ago period.

The prior-year quarter's results included a non-cash asset impairment loss of $341 million after taxes, or $0.62 per share, and severance expense of $41 million after taxes, or $0.07 per share, primarily related to the Aruba refinery. Excluding these items, net income for the year-ago quarter was $1.1 billion or $1.90 per share.

On average, nineteen analysts polled by Thomson Reuters expected the company to report earnings of $0.41 per share for the latest quarter. Analysts' estimates typically exclude special items.

Operating revenues for the quarter increased 4 percent to $36.14 billion from $34.73 billion in the year-ago period. Analysts had a consensus revenue estimate of $29.76 billion.

Operating income for the quarter was $532 million, down 59 percent from $1.31 billion in the same period last year. The decrease in operating income was due to lower refining throughput margins and higher costs for Renewable Identification Numbers to comply with the U.S. Federal Renewable Fuel Standard.

Valero's refining segment operating income for the quarter declined 61 percent from the year-ago period to $600 million, reflecting lower refining throughput margins caused by lower gasoline and diesel margins. Throughput refining margin per barrel declined 41 percent to $7.76.

However, refining throughput volumes averaged 2.77 million barrels per day in the quarter, up 7 percent from the year-ago period. The increase was mainly due to less unplanned maintenance activity and less weather-related downtime.

Valero's ethanol segment operating income was $113 million, compared to operating loss of $73 million in the prior-year quarter. The latest quarter's results reflect improved gross margin per gallon and higher production volumes.

Looking ahead to fiscal 2013, Valero expects capital expenditures, including turnarounds and catalyst, to be about $2.85 billion, of which $1.30 billion is for growth investments.

For 2014, the company expects capital expenditures, including turnarounds and catalyst, to be about $3 billion.

In Tuesday's regular session, VLO is trading at $39.97, up $0.52 or 1.32 percent on a volume of 3.46 million shares.