31 July 2012 14:29 [Source: ICIS news]
LONDON (ICIS)--Valero’s second-quarter net income from continuing operations rose by 12% year on year to $831m (€681m), on higher throughput margins in the US mid-continent, US west coast and North Atlantic refining regions, the US-based refiner said on Tuesday.
A 342,000 bbl/day increase in refinery throughput volume – mainly from the addition of refineries in Pembroke, Wales and Meraux, Louisiana, in the US – also helped to raise earnings.
The group’s operating revenues for the three months ended 30 June 2012 increased by 11% year on year to $34.7bn.
Second-quarter 2012 operating income was $1.36bn, compared with $1.29bn reported in the same period last year, as profits in the group’s Refining business rose by 8.9% year on year.
Valero said partially offsetting the increase in operating income were lower US Gulf coast gasoline margins and smaller discounts for medium and heavy sour crudes.
Valero’s Corporate business made an operating loss of $180m, compared with a loss of $162m in the second quarter of 2011.
Operating income in Valero's Ethanol segment fell sharply to $5m from $64m in the second quarter of 2011. The company said the decrease in ethanol operating income was mainly due to lower gross margins, as excess industry ethanol inventories held margins at low levels.
“In July, Valero significantly reduced ethanol production rates as margins were negative due to rapidly rising corn prices and continued high inventories of ethanol,” the company added.
For the full-year 2012, Valero's estimate for total capital spending, including turnaround and catalyst expenditures, is approximately $3.6bn versus prior guidance of $3.5bn, mainly because of the acceleration of certain projects originally scheduled for completion in 2013.
The group also reported on Tuesday that its board of directors has authorised company management to pursue a separation of Valero's Retail business from the remainder of the group.
Valero said it is currently reviewing several potential separation transactions, including a tax-efficient distribution of the retail business to its shareholders.
"After careful consideration, we believe a separation of our retail business from the remainder of Valero by way of a tax-efficient distribution will create operational flexibility within the businesses and unlock value for our shareholders," said Valero chairman and CEO Bill Klesse.
"As independent companies, both Retail and the remaining business will be better-positioned to focus on their industry-specific strategies,” he added.
Valero's Retail segment reported a quarterly operating income of $172m in the second quarter of 2012, versus $135m in the same period last year, mainly because of higher fuel margins and volumes in US retail.
($1 = €0.82)
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