Nov 6, 2007 9:25 am US/Central
Valero Reports Its Profit Fell Almost 21%
SAN ANTONIO (AP) ―
Valero Energy Corp., the nation's largest independent oil refiner, said Tuesday its third-quarter profit dropped almost 21 percent from a year earlier.
The company had warned earlier that lower margins would hurt its results for the July-September period, and the adjusted results came in above Wall Street expectations.
Valero's shares rose nearly 3 percent in premarket trading.
Chairman and CEO Bill Klesse also said the company will explore a sale of its Aruba refinery.
Net income fell to $1.27 billion, or $2.09 per share, from $1.6 billion, or $2.55 per share, a year earlier.
Revenue rose 2 percent to $23.70 billion from $23.24 billion.
The company said refining margins in West Coast areas were substantially lower as gasoline and diesel margins fell compared to last year. Margins for other products, like asphalt, lube oils and petrochemical feedstocks, were also considerably lower, Valero said.
Excluding the costs of an accelerated stock repurchase program and a gain from the repayment of a loan from a foreign subsidiary, Valero's profits would have been $1.40 per share in the latest quarter.
Analysts surveyed by Thomson Financial had expected $1.36 per share after the company warned last month that profits were hurt by weaker margins. They forecast revenue of $22.96 billion.
Klesse said margin problems have continued into the fourth quarter as refined product prices -- gasoline, in particular -- have failed to keep pace with the cost of crude.
"However, industry fundamentals are intact with gasoline inventories near five-year lows and diesel stocks considerably below last year's levels," said Klesse in a written statement.
Valero shares rose $2.07 to $71.49 in premarket trading Tuesday.
For the first nine months of the year, Valero earned $4.7 billion, or $7.80 per share, compared to $4.3 billion, or $6.83 per share, in 2006.
The largest refiner in North America, Valero operates 17 refineries and 5,800 retail outlets in the United States, Canada and the Caribbean.
(© 2007 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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