Valero pares losses in Q4; dividend flat

Valero Energy continued to lose money in the fourth quarter but at a slower pace as the pandemic and the near shutdown of the U.S. economy continued to reduce demand for its refined crude oil products.

The company said it lost $359 million in the last three months of the year, compared with a $1.1 billion profit during the same period in 2019. The most recent loss, however, was an improvement on the third quarter, when Valero lost $464 million — a sign that the hard-hit refining sector may be slowly recovering. Valero’s refining business lost $377 million in the fourth quarter compared with a profit of $1.4 billion in the same period of 2019.

Quarterly revenue declined 40 percent to $16.6 billion from $27.8 billion in the same period a year earlier.

For the year, Valero lost $1.42 billion compared with a $2.4 billion profit in 2019. Annual revenue fell to $65 billion from $108 billion in 2019.

Despite the financial setbacks, Valero maintained its quarterly dividend of 98 cents per share and returned $400 million to shareholders in the fourth quarter.

CEO Joseph Gorder said the company expects demand for fuel and other refined crude products to improve as vaccines are distributed around the globe.

“We also expect a faster recovery in refining margins with the continued shutdowns and conversions of uncompetitive refineries,” Gorder said in a statement.

In a Thursday conference call with analysts, Valero Executive Vice President and COO Gary Simmons said the outlook for 2021 is promising.

“We built a significant surplus, especially early on in the pandemic. Seeing that surplus essentially gone and getting back into the five-year average range is very encouraging. As demand starts to pick up, it will allow margins to recover much quicker,” Simmons said.

Evecore analyst Doug Terreson agreed. “Inventories are starting to shape up a little bit,” he said. “They look like they are going the same way as demand for both gasoline and distillate, which is a good thing.”

Valero shares closed down less than a percentage point at $58.33 on Thursday.