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Valero’s Q2 Earnings Drop On Weaker Refining Margins  

Valero Energy (NYSE: VLO) reported significantly lower net income for the second quarter compared to the same period of 2022, as refining margins halved from a year ago.

Valero Energy said its net income slumped to $1.9 billion, or $5.40 per share, for the second quarter of 2023, compared to $4.7 billion, or $11.57 per share, for the second quarter of 2022.

Still, the Q2 2023 earnings per share beat the analyst consensus of $5.04 per-share profit compiled by The Wall Street Journal.

Total revenues plunged to $34.5 billion from $51.6 billion for the second quarter of 2022.

Valero’s refining margin per barrel of throughput halved to $15.62, from $30.01 in the second quarter of 2022, as refining margins globally were hit by higher Chinese fuel exports, weaker economic activity, and higher global refining capacity.

As a result, the company’s refining business reported operating income of $2.4 billion for the second quarter of 2023, sharply down from $6.2 billion booked for the second quarter of 2022.

Total throughput volumes were flat on the year, at around 3 million barrels per day (bpd) in the second quarter of 2023, and capacity utilization was also basically in line with this time last year, at 94%.

“Our refineries ran well with throughput capacity utilization at 94 percent and our U.S. wholesale system set a sales record of over 1 million barrels per day in May and June,” Valero’s chief executive officer and president, Lane Riggs, said in a statement.

Refiners in the U.S. booked bumper profits last year amid high refining margins and reduced operational capacity in America, more than recovering the hefty losses from 2020, when the pandemic hit fuel demand.

This year, refining margins globally have declined and have weighed on the second-quarter earnings of the major integrated oil and gas firms, too, including Shell and TotalEnergies, which both missed Q2 analyst forecasts amid lower oil and gas prices and weaker refining margins.

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By Charles Kennedy for Oilprice.com

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