Valero Energy Corp. (VLO) swung to a first-quarter loss, due in part to asset write-downs, as the oil refining company's revenue grew more than expected.
The largest independent oil refining company in the U.S. has reported increased revenue in recent quarters as global distillate demand grows despite continuing weakness in the U.S. gasoline market. But Valero had warned in April that its decision to temporarily shut down an Aruba refinery would push its first quarter into the red, though the company still expected to post a profit excluding certain charges.
The refining industry has been grappling with major shifts in fuel demand and in energy production that have wiped out the profitability of such former refining hubs as the U.S. East Coast and the Caribbean. Caribbean refineries in particular lack access to the cheap natural gas, used as feedstock in fuel production, that have helped make U.S. Gulf Coast refineries competitive.
Valero Energy reported a loss of $432 million, or 78 cents a share, compared with a profit of $98 million, or 17 cents, a year earlier. The most-recent quarter included a $1.09 a share write-down charge, while the year-earlier quarter included a 62 cents a share charge on derivative contracts. Its April 16 projection was a loss from continuing operations between 75 cents to 85 cents a share.
Revenue jumped 34% to $35.17 billion, topping the $27.1 billion estimate from analysts polled by Thomson Reuters.
Operating margin swung to negative 0.7% from positive 0.9%.
The refining business swung to an operating loss as the throughput margin per barrel fell to $7.71 from $9.91 a year earlier. The U.S. retail operations saw its operating profit drop 39%.
Shares closed Monday at $24.70 and were inactive premarket. The stock has risen 3% over the past three months.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283; email@example.com