U.S. Refiner Valero Beats Q3 Earnings Estimates On Strong Sales

Valero Energy (NYSE: VLO), the second largest U.S. refiner by capacity, reported on Thursday higher-than-expected profits for the third quarter of 2023, amid continued strong product demand in America.

Valero booked a net income attributable to Valero stockholders of $2.6 billion, or $7.49 per share, for the third quarter of 2023. This compares to $2.8 billion, or $7.19 per share, for the third quarter of 2022.

The analyst consensus had expected $7.47 earnings per share for the third quarter of 2023.      

Valero’s refining margin fell to $5.414 billion in the third quarter from $5.9 billion for the same period of 2022.  

Refining margins have dropped from last year but tight supplies and resilient fuel demand helped Valero beat the profit estimates for the third quarter.

“Our refineries operated well and achieved 95 percent throughput capacity utilization, which is a testament to our team’s relentless focus on operational excellence,” said Lane Riggs, Valero’s Chief Executive Officer and President.

“Product demand remained strong in our U.S. wholesale system, which matched the second quarter record of over 1 million barrels per day of sales volume,” Riggs added.

For the second quarter this year, Valero reported significantly lower net income compared to the same period of 2022, as refining margins halved from a year ago. Despite lower second-quarter income, Valero’s earnings were higher than estimates in the second quarter of 2023, too.

In the third quarter of 2023, Valero returned $2.2 billion to stockholders, of which $360 million was paid as dividends and $1.8 billion was for the purchase of approximately 13 million shares of common stock, resulting in a payout ratio of 68 percent of adjusted net cash provided by operating activities.

“Valero continues to target an annual payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities,” the refiner said.

By Tsvetana Paraskova for Oilprice.com

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