Already a Bloomberg.com user?
Sign in with the same account.
SAN ANTONIO (AP) — Valero Energy Corp. said Tuesday its third-quarter earnings fell 44 percent as the refiner and gasoline station owner booked hefty charges from its conversion of a shuttered oil refinery on the southern Caribbean island of Aruba into a fuel storage facility.
Valero also reported weaker profit margins at most of its refining operations.
The San Antonio-based company reported net income of $674 million, or $1.21 per share, for the three-month period ended Sept. 30. That was down from $1.2 billion, or $2.11 per share, a year earlier.
Valero booked an impairment charge of $341 million, or 62 cents per share, as a result of its Sept. 3 announcement of plans to convert its shuttered Aruba refinery to a fuel terminal. Valero suspended refining operations at the site in March, citing unfavorable refining economics.
The conversion to a terminal requires a smaller workforce, and Valero booked severance expenses of $41 million, or 7 cents per share, after taxes.
Excluding those one-time items, Valero reported adjusted earnings of $1.1 billion, or $1.90 per share.
On that basis, the result topped analysts' expectations for $1.76 per share, according to a survey by FactSet.
Revenue rose 3 percent to $34.73 billion from $33.71 billion, above analysts' expectations for $33.5 billion.
Total costs and expenses rose 5 percent to $33.42 billion from $31.73 billion.
Valero said profit margins from refining operations were weaker in its U.S. Gulf Coast operations, as well as in the Mid-Continent and West Coast operations. Those were partly offset by higher margins in the North Atlantic.
Margins also declined in Valero's retail and ethanol operations.
The company's retail segment reported $41 million in operating income during the latest quarter, down from $97 million in the year-ago quarter. Valero attributed the decline primarily to lower fuel margins and volumes in the U.S. and Canada.
The ethanol segment reported an operating loss of $73 million in the latest quarter, compared with $107 million in operating income a year earlier. High prices for corn and high industry inventory of ethanol squeezed profit margins in that segment.
Valero operates 16 petroleum refineries and about 6,800 retail and branded wholesale fuel outlets, including U.S. and Caribbean brands such as Valero, Diamond Shamrock, Shamrock and Beacon.
Valero's stock is not trading because markets are closed for a second day in the aftermath of Hurricane Sandy.