Valero reports improved ethanol margins, increased production
Valero Energy Corp. has released its financial results for the third quarter, reporting net income attributable to stockholders of $312 billion, or 57 cents per share, down from $674 million or $1.21 per share during the same period of last year.
Operating income for the quarter was $532 million, down from $1.3 billion during the third quarter of 2012. Valero attributed the decreased in operating income to lower refining throughput margins caused by lower gasoline and diesel margins, lower light sweet and sour crude oil discounts, and higher costs for renewable identification numbers (RINs). However, the refiner also noted that strong performance by its ethanol business partially offset the decline in operating income.
Valero’s ethanol segment reported operating income of $113 million for the third quarter, up from $73 million for the same period of last year. The increase is attributed to improved gross margin per gallon and higher production volumes.
In a call to discuss the results, Ashley Smith, vice president of investor relations at Valero, said production average 3.4 million gallons per day during the quarter. That production level is an increase of 992,000 gallons per day compared to the third quarter of 2012. During the fourth quarter, Valero expects ethanol production to increase further, averaging 3.5 million gallons per day.
Regarding RINs, Valero reported the cost of compliance was $185 for the quarter, up from $70 million reported for the third quarter of last year. However, Smith said due to a recent drop in RIN prices, Valero has reduced its estimated cost of compliance with the renewable fuel standard (RFS) to $500 million for 2013, down from $600 million.