Valero reports strong Q2 results for ethanol segment

By Erin Voegele | July 31, 2014

Valero Energy Corp. has released financial results for the second quarter, reporting strong results for its ethanol segment. Overall, the company reported net income from continuing operations attributable to Valero stockholders of $651 million, or $1.22 per share, up from $463 million, or 84 cents per share, for the same period of last year.

Ethanol operating income was $187 million, up from $85 million for the second quarter of 2013. Valero attributed the $92 million increase primarily to higher gross margin per gallon driven by lower corn costs as a result of an abundant corn crop and lower industry ethanol inventories at the start of the quarter. The company also noted that lower production volume resulting from rail congestion partially offset the increase in operating income.

“Our ethanol investments have continued to be strong performers, delivering a total of $430 million in operating income for the first half of 2014,” said Joe Gorder, president and CEO of Valero. “We expect our eleventh ethanol plant, the Mount Vernon facility acquired in March of this year, to begin operating and contributing to the segment’s earnings in the third quarter.”

During a call to discuss the quarterly results, John Locke, executive director of investor relations at Valero, noted ethanol production volumes averaged 3.3 million gallons per day during the second quarter, down when compared to the same period of the previous year. The reduction was attributed to rail congestion in the Midwest. Moving into the third quarter, ethanol production is expected to average 3.6 million gallons per day.