Valero posts record $3.7B profit as refining margins surge

Valero Energy reported record second-quarter net income of $3.7 billion, or $12.62 per share, up from $714 million, or $2.28 per share, a year earlier.

"Our refineries, renewable diesel plants, and ethanol plants operated safely and reliably, helping to meet resilient demand for transportation fuels," Chairman and Chief Executive Officer Lane Riggs said.

Revenues rose to $44.5 billion from $29.9 billion. Refining operating income reached $4.5 billion, up from $1.3 billion, on throughput of 3 million barrels per day and a margin of $23.62 per barrel, versus $12.35 a year earlier. Renewable Diesel swung to $717 million from a $79 million loss, while Ethanol earned $318 million, up from $54 million.

The results reflect a tightening global refining market, with roughly 5 million barrels per day of capacity offline and product inventories below seasonal norms. Valero returned $2.6 billion to stockholders, a 59 percent payout, and declared a quarterly dividend of $1.20 per share on July 16.

Management guided third-quarter Gulf Coast throughput of 1.78 million to 1.83 million barrels per day and cash operating expenses of $4.75 per barrel. Full-year capital investments are expected at about $2 billion, including $250 million to repair the Port Arthur distillate hydrotreater, largely covered by insurance. The $230 million FCC unit optimization at St. Charles remains on track to start in the third quarter.

Goldman Sachs raised its price target on Valero to $357 from $286, maintaining a Buy rating, while TD Cowen holds at $338. The stock trades on the New York Stock Exchange under the ticker VLO.

The record quarter positions Valero to accelerate shareholder returns once commodity volatility eases, with cash of $7.9 billion sitting above the long-term $4 billion to $5 billion target. Investors will watch third-quarter results for the St. Charles project start-up and the pace of global refining capacity restarts.

This article is for informational purposes only and does not constitute investment advice.