Petroleum refining and marketing company Valero Energy Corp. (VLO: Quote) Tuesday reported a turn around to profit in the second quarter, helped by revenue growth and margin improvement.
Valero Energy's second-quarter net income was $583 million or $1.03 per share, compared with a loss of $254 million or $0.48 per share in the same quarter last year. The San Antonio, Texas-based company reported a net loss $113 million or $0.20 per share in the first quarter.
The company shut down its operations in Delaware City in 2009 and sold them to the Delaware City Refining Company LLC and Delaware Pipeline Company LLC, wholly owned subsidiaries of PBF Energy Company LLC, in the second quarter of 2010. Income from discontinued operations was $53 million, compared with a loss of $63 million in the prior-year quarter.
Continuing operations posted an income of $530 million or $0.93 per share in the quarter, turning around from a loss of $191 million or $0.36 per share a year ago.
On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude special items.
Valero also reported second-quarter operating income of $921 million, versus an operating loss of $192 million last year. The $1.1 billion increase in operating income was attributed to higher margins for diesel and many secondary products such as petrochemicals, asphalt, and lube oils, as well as better discounts for low-quality feedstocks.
Second-quarter operating revenues totaled $21.78 billion, up from $17.38 billion in the prior-year quarter. Five analysts had a consensus revenue estimate of $21.59 billion for the quarter. In the first quarter, the company's operating revenues were $19.64 billion.
The company, which owns or operates 15 refineries with a combined throughput capacity of approximately 2.8 million barrels per day, said that its refining operations generated operating income of $921 million, compared with an operating loss of $143 million a year ago.
Valero also operates about 5,800 retail and branded wholesale outlets in the U.S., Canada and the Caribbean under the Valero, Diamond Shamrock, Shamrock, Ultramar, and Beacon brands. The company's total retail operating income grew to $109 million from $65 million in the prior-year quarter.
Ethanol operating income was $35 million, compared with $22 million last year. The company has ten ethanol plants in the Midwest with a combined capacity of 1.1 billion gallons per year.
Valero said it remains cautiously optimistic that the global economic expansion will drive growth in refined-products demand. For fiscal year 2010, the company expects capital spending of approximately $2.3 billion. The company is also continuing to evaluate strategic alternatives for its Paulsboro refinery.
Among others in the sector, Exxon Mobil Corp. (XOM: Quote) is set to report its results for the second quarter on July 29. Analysts are of the view that the company will earn $1.47 per share with revenues of $98.49 billion.
Chevron Corp. (CVX: Quote) is scheduled to announce its second-quarter results on July 30. Street analysts forecast earnings of $2.44 per share on revenues of $52.52 billion. The company has projected that second-quarter earnings would be higher than the first quarter, primarily reflecting improved results from its downstream operations and the strengthening of the U.S. dollar.
British oil giant BP Plc (BP: Quote,BP.L) today reported a loss of $17 billion for its second quarter, compared with a profit of $4.38 billion last year, marred by massive charges of $32.2 billion to handle the oil spill in the Gulf of Mexico. The company also revealed that its Chief Executive Officer Tony Hayward will step down effective October 1.
VLO is trading at $17.33 on the NYSE, down $0.23 or 1.31%, on a volume of 9.82 million shares.
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by RTT Staff Writer
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