US Valero's Q4 income falls on lower refining throughput margins

31 January 2012 14:08  [Source: ICIS news]

LONDON (ICIS)--Valero's income from continuing operations for the fourth quarter of 2011 fell to $45m from $180m in the same period the year before, partly because of a decrease in the refining throughput margin, the US-based refiner said on Tuesday.

The results also included an after-tax benefit of around $161m (€122m) following inventory adjustments, it said.

The group’s operating revenues for the three months ended December 31 rose 56% year on year to $34.67bn, Valero added.

Valero’s fourth-quarter 2011 operating income fell to $167m from $378m in the same period the year before, following a decrease of $1.84/bbl in the refining throughput margin, particularly in the Gulf Coast region where the throughput margin decreased by $4.21/bbl, it said.

“The decrease in the throughput margin was primarily due to lower margins for gasoline and petrochemical feedstocks plus reduced discounts for medium and heavy sour feedstocks,” the company added. 

Valero’s refining throughput volumes increased by 523,000 bbls/day in the fourth quarter of 2011 versus the same period in 2010.

The company said the increase in throughput volumes was mainly due to adding capacity from the acquisition of the refineries in Pembroke in the UK, and Meraux, Louisiana, in the US as well as operating its Aruba refinery in the Caribbean, which was not in operation during the fourth quarter of 2010.

For the year ended 31 December 2011, Valero’s income from continuing operations more than doubled to $2.10bn from $923m in 2010, while operating revenues grew 53% year on year to $126.0bn.

"Although the fourth quarter clearly showed the volatility of the refining business, 2011 was a great year for Valero," said chairman and CEO Bill Klesse. 

"We had the highest annual earnings since 2008, acquired the Pembroke and Meraux refineries and related assets, completed several of our major capital projects, and paid off over $775m in debt,” he added.

Klesse said that in 2012, product margins have improved versus the fourth quarter of 2011.

"The macro view for refining in 2012 looks promising given the combination of positive economic trends in the US, expectations of global demand growth, and continuing capacity rationalisation in the industry, particularly in Europe, the US east coast, and the Caribbean," he added.

($1 = €0.76)

By: Franco Capaldo
+44 (0)20 8652 3214

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