Crude oil refiner and marketer Valero Energy Corp. (VLO), Wednesday reported a narrower fourth quarter loss, helped by cost reduction initiatives and improved revenues, even as refining industry continued to be pressurized by weak demand, narrow margins, and low discounts. Valero also intends targeting another $100 million of pre-tax cost reductions in 2010, and plans exploring additional ways to improve profitability.
Net loss of the San Antonio, Texas-based company was $1.41 billion or $2.51 per share during the quarter, compared to a net loss of $3.28 billion or $6.36 per share in the year-ago quarter.
Excluding losses of $1.23 billion related to the closure of Delaware refinery, Valero's loss from continuing operations narrowed to $182 million or $0.32 per share from $3.2 billion or $6.22 per share in the same quarter a year ago.
Excluding special items, loss from continuing operations was $155 million or $0.28 per share, compared to $795 million or $1.53 per share in the year-earlier quarter.
On average, 15 analysts polled by Thomson Reuters expected a loss of $0.47 per share for the quarter. Analysts' estimate typically exclude one-time items.
Valero's operating revenues improved to $18.87 billion from $17.83 billion in the corresponding quarter last year, while the Street expected revenues of $18.34 billion.
Despite being the largest independent refiner of petroleum in the US, Valero has been struggling troubled constantly by losses emanating from ongoing depressions in the refining products market, at a time when new refining capacity is coming alive around the world. In the third quarter, company's loss was $629 million or $1.12 per share and prior to that in the second quarter, the loss was $254 million or $0.48 per share. If the presence of significant loss contingency accrual drove the company to losses in the third quarter, lower diesel and jet fuel margins acted as the main catalysts in the second quarter. Third quarter revenues were $19.5 billion, while in the second quarter revenues were $17.93 billion.
The company, however, is showing positive signs of returning to profitability with added effort in the form of shutting down of unprofitable capacity and cost reduction initiatives.
Bill Klesse Chief Executive Officer said,"Approximately $215 million of the savings was due to our aggressive cost-reduction efforts, and most of the remainder was a result of lower energy and natural gas prices." "We also reduced capital spending plus turnaround and catalyst expenditures to $2.7 billion in 2009, which is down $580 million from 2008. We expect the savings to continue into 2010 with a full year budget planned at $2 billion," added Klesse.
The company had also cut down its quarterly dividend to five cents per share, and remained focused on reducing overhead costs.
Amongst others in the industry, British oil giant BP Plc (BP, BP.L), in its third quarter, reported a 33.7% decline in profit to $5.34 billion or 28.18 cents per share, as a 7% growth in production was offset by lower oil and gas prices. Total revenues and other income were $67.86 billion.
Another player, Hess Corp. (HES), in its third quarter, reported a fall in profit hurt by the decline in crude oil and natural gas prices. Net income attributable to the New York-based company was $341 million or $1.05 per share and total revenues were $7.38 billion.
For the quarter under review, total costs and expenses of Valero decreased to $19.09 billion from $20.62 nillion in the prior-year quarter. Operating loss narrowed to $221 million from $2.8 billion in the year-earlier quarter.
Total operating costs per barrel increased to $5.62 from $5.51 in the prior-year quarter. Total throughput volumes decreased to 2,123 Mbbls per day from 2,494 Mbbls per day, and total yields dropped to 2,142 Mbbls per day from 2,491 Mbbls per day in the same quarter a year ago.
Total refining operating loss was $226 million, compared to loss of $2.80 billion in the year-earlier quarter.
For full year 2009, Valero's net loss widened to $1.98 billion or $3.67 per share from $1.31 billion or $2.16 per share last year. Loss from continuing operations was $352 million or $0.65 per share and excluding special items, loss was $55 million or $0.10 per share. Operating revenues plunged to $68.14 billion from $113.14 billion in the prior year.
On January 4, 2010, brokerage Deutsche Bank upgraded Valero shares to 'Hold' from 'Sell,' with a mean target of $20.45.
VLO is currently trading at $18.75, down $0.27 or 1.42%, on a volume of 15.92 million shares. In the last 52-week period, the stock traded in a range of $15.29 to $25.59, with a three-month average volume of 10.85 million shares.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.