Valero reports $704M loss in Q1
Valero Energy Corp. took a loss of $704 million in the first three months of the year, but the San Antoniobased refiner said it’s seeing demand for fuel recover as vaccinations begin to quell the pandemic.
The refiner’s losses resulted in part from the winter storm in February, which destabilized the electrical grid and forced Valero and other refiners to cut production along the Gulf Coast.
At the peak of the freeze, about three-quarters of refining capacity along the Gulf Coast was offline, according to S&P Global Platts.
The winter storm cost Valero $579 million and drove a $1.15 loss per share.
In the first quarter of 2020, when the pandemic began spreading globally, Valero posted a nearly $1.9 billion dollar loss, or a $4.54 loss per share.
On Thursday, Valero reported a loss of $1.73 per share in this year’s first quarter. That beat Wall Street expectations of a $1.89 loss per share.
The company generated $20.8 billion in revenue for the quarter ended March 31, a nearly six percent decline from the same quarter a year earlier.
Valero’s refining business lost $592 million in the quarter, compared with a more than $2 billion quarterly loss a year ago. The company’s refineries produced 2.4 million barrels per day, a 15 percent decline from a year ago caused largely by the winter storm.
Valero CEO Joe Gorder said demand for gas is at 93 percent of what it was before the pandemic, while demand for diesel has fully recovered.
“As we head into summer, we believe that there’s a pent-up desire among much of the population to travel and take vacations, which should drive incremental demand for transportation fuels,” Gorder said.
The company’s ethanol segment lost $56 million in the quarter, largely because of high energy costs during the February storm. Ethanol production averaged 3.6 million gallons per day, a 13 percent decline from a year ago.
Valero’s renewable diesel business, meanwhile, posted record earnings of $203 million for the quarter. That was up from $198 million a year ago.
Valero also said Thursday it will partner with two firms on a large-scale carbon capture project that will reduce carbon dioxide emissions at eight of Valero’s ethanol plants located in the Midwest. The system is expected to store 5 million metric tons of carbon dioxide annually.
“We are leveraging our global liquid fuels platform to continue expanding our long-term competitive advantage in renewables,” Gorder said.
Valero paid out $400 million to stockholders in the quarter through a 98-cent stock dividend, which the company said it will continue to pay to investors.
Valero’s stock price plunged last spring amid the onset of the pandemic, but it has since recovered. So far this year, Valero’s share price has risen by nearly 23 percent.
The refiner’s shares closed at $68.48 on Thursday, down 2.6 percent from a day earlier.