Cost cuts help refiner Valero beat profit estimate
(Reuters) Valero Energy Corp.'s quarterly profit beat analysts' estimate by a wide margin, as the largest independent US refiner kept a tight leash on costs.
The company's shares were trading up 1.5% in premarket trading at $57 on Tuesday.
Valero said costs and expenses fell 8%, or about $2 B, to $18.75 B in 3Q.
The cost cuts helped the refiner to offset shrinking margins due to higher gasoline inventories and rising costs of biofuel blending obligations.
Refining throughput margin fell to $9.07/bbl in the latest quarter, from $14.38/bbl a year earlier.
US refiners are in the midst of their worst year since the shale boom began in 2011, with high fuel inventories squeezing margins this year.
The company's biofuel blending costs more than doubled to $198 MM.
However, the company backed its full-year cost estimate for blending biofuels at $750 MM to $850 MM.
Valero's refineries operated at 95% throughput capacity utilization in 3Q, down from 96% in the preceding quarter.
After adjustments, Valero reported earnings of $1.24/share, while analysts, on average, had expected earnings of $0.93, according to Thomson Reuters.
Net income attributable to shareholders fell to $613 MM, or $1.33/share, in 3Q, from $1.38 B, or $2.79/share, a year earlier.
Valero on Tuesday also marginally lowered its 2016 capital expenditure forecast by $200 MM, to around $2.4 B.
The company reported an operating revenue of $19.64 B.
Reporting by John Benny; Editing by Sriraj Kalluvila
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