US Valero Q3 net income falls 54% on lower throughput margins

29 October 2013 14:04  [Source: ICIS news]

HOUSTON (ICIS)--Valero’s third-quarter net income fell almost 54% year on year to $312m (€225m) as lower refining throughput margins cut into operating income, the US-based refining major said on Tuesday.

Valero said that the overall margin decline was due to lower gasoline and diesel margins, lower light sweet and sour crude oil discounts, as well as higher costs for complying with US renewable fuel regulations.

However, a strong performance in Valero’s ethanol business partly offset the decline in operating income.

Valero’s operating income for the three months ended 30 September was $532m, down from $1.3bn in the same period a year ago. Operating revenues were $36.1bn, compared with $34.7bn in the 2012 third quarter.

“Third quarter refining margins were challenged, but our story remains intact,” said CEO
Bill Klesse.

“Fourth quarter 2013 gasoline margins have started out seasonally weak, but distillate margins continue to be strong,” Klesse said.

“Fortunately for Valero, US and Canadian light sweet crude oil discounts relative to Brent have been improving versus the third quarter,” he added.

Valero’s third-quarter 2013 refining throughput volumes averaged 2.8m bbl/day, an increase of 172,000 bbl/day from the third quarter of 2012. Volumes increased mainly due to less unplanned maintenance activity and less weather-related downtime, the company said.

Valero’s ethanol business reported operating income of $113m in the third quarter, compared with an operating loss of $73m in the third quarter of 2012.

The year-on-year improvement in ethanol was mainly due to improved gross margins per gallon and higher production volumes. Gross margin per gallon improved due to low ethanol inventory levels in the US, and production volumes were higher in response to the improved gross margin per gallon, Valero said.

($1 = €0.72)

By: Stefan Baumgarten
+1 713 525 2653

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