Valero Energy Corp. swung to a fourth-quarter profit on an inventory gain from a year-earlier quarter that included losses from discontinued operations. Margins fell, however, on lower refining profit.
Valero, the largest independent oil refining company in the U.S., has reported increased revenue in recent quarters as global distillate demand grows despite continuing weakness in the U.S. gasoline market. Gasoline exports to Latin America, due to supply problems there, have also played a part.
But the company warned earlier this month that weak margins on refined products, particularly for gasoline and petrochemical feedstocks, would hurt its fourth-quarter results. Refining margins were also damped by reduced discounts for heavy sour feedstocks and the narrowing of prices for West Texas Intermediate versus Brent crude oils, resulting in higher-priced crude oils flowing through the system.
Valero on Tuesday said product margins nevertheless have so far improved this year compared with the fourth quarter.
Valero reported a profit of $45 million, or 8 cents a share, compared with a loss of $438 million, or 77 cents, a year earlier. The most-recent quarter included a 29 cent gain from a year-end, last-in-first-out inventory decrement, while the year-earlier quarter included a $1.09 loss from discontinued operations. Its Jan. 16 projection was earnings between breakeven and 10 cents a share, including the gain.
Revenue jumped 56% to $34.7 billion, topping the $32.33 billion most recently expected by analysts polled by Thomson Reuters. Operating margin fell to 0.5% from 1.7%.
At its refining business, operating earnings dropped 91% as the through put margin per barrel fell to $5.46 from $7.30 a year earlier. Its smaller U.S. retail operations saw its operating profit rise 36%.
Shares were up 0.08% at $24.30 and were inactive premarket. The stock has risen 15% so far this year.
