Valero Energy profit falls on weakness in ethanol

Source: By TESS STYNES, Market Watch • Posted: Monday, February 1, 2016

Valero Energy Corp. said its fourth-quarter earnings fell 74% on a sharp decline in its ethanol business caused by declining prices, while operating income in its refining business was flat.

Still, shares rose 4.6% to $69 in recent premarket trading as per-share earnings, excluding certain one-time items, and revenue beat expectations.

For the latest quarter, Valero’s refining business’s adjusted operating earnings were unchanged at $1.5 billion.

In the ethanol segment, adjusted operating profit slumped to $37 million from $154 million on weaker margins as selling prices declined but corn prices remained relatively stable.

Overall, Valero reported a profit of $298 million, or 62 cents a share, down from $1.16 billion, or $2.22 a share, a year earlier. Excluding one-time items, per-share earnings from continuing operations fell to $1.79 from $1.83. Revenue slumped 33% to $18.78 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.45 and revenue of $16.75 billion.

Valero raised its 2016 capital spending outlook to $2.6 billion, compared with its previous estimate of roughly $2.4 billion.

Phillips 66 is set to report its fourth-quarter earnings Friday, while Marathon Petroleum Corp. plans to reports it fourth-quarter results Feb. 3.