Valero reports profitable Q4 for ethanol, renewable diesel

By Erin Voegele | January 30, 2020

Valero Energy Corp. released fourth quarter results on Jan. 30, reporting a profitable three-month period for both its ethanol segment and renewable diesel segment. The company also indicated interest in expanding its renewable fuels business.

Valero’s ethanol segment reported $36 million of operating income for the fourth quarter of 2019, compared to a $27 million operating loss reported for the same period of 2018. The company primarily attributed the increase to higher ethanol prices. Valero said ethanol production volumes averaged 4.3 million gallons per day during the fourth quarter of last year, which is in line with production volumes for the same quarter of 2018. During an earnings call, company officials predicted the company’s ethanol segment is expected to produce an average of 4.2 million gallons per day during the first quarter of 2020.

Valero reported $541 million in fourth quarter operating income for its renewable diesel segment, up from $101 million reported for the same period of 2018. After adjusting for the retroactive blender’s tax credit recorded in the fourth quarter of 2019, Valero said adjusted renewable diesel operating income reached $187 million for the fourth quarter of 2019, compared to $167 million for the same period of the previous year. Renewable diesel sales volumes averaged 844,000 gallons per day during the fourth quarter, up 124,000 gallons per day when compared to the fourth quarter of 2018. According to company officials, Valero currently expects renewable diesel sales volumes to average 750,000 gallons per day in 2020.

During the earnings call, Joe Gorder, chairman and CEO of Valero, said the company continues to explore growth opportunities in its renewable fuels business. As previously announced, he said Valero’s Diamond Green Diesel joint venture is in the advanced engineering review phase or a new renewable diesel plant could be built at the company’s facility in Port Arthur, Texas. If that project is approved, operations are expected to commence in 2024, Gorder said. Once operational, the plant would boost the annual production capacity of Diamond Green Diesel to more than 1.1 billion gallons annually, or approximately 70,000 barrels per day.

Valero currently owns 14 ethanol plants with a combined capacity of 1.73 billion gallons per year, one renewable diesel plant that is expanding capacity to 675 MMgy, and 15 petroleum refineries with a combined throughput capacity of 3.1 million barrels per day.

Overall, Valero reported net income attributable to company stockholders of $1.1 billion, or $2.58 per share, for the fourth quarter of 2019 compared to $952 million, or $2.24 per share, for the same period of 2018.  For the full year, net income attributable to Valero stockholders was $2.4 billion, or $5.84 per share, compared to $3.1 billion, or $7.29 per share, for 2018.