Valero issues weak 2Q profit outlook

Valero issues disappointing 2nd-qtr profit prediction citing lower discounts, higher costs

Associated Press

SAN ANTONIO (AP) -- Valero Energy Corp. has issued a lower-than-expected second-quarter profit prediction, citing lower discounts for certain kinds of oil and higher costs.

The San Antonio-based refinery operator also disclosed late Thursday that its new hydrocracker unit at its Valero St. Charles refinery has begun operations. Valero started up a similar hydrocracker at its Port Arthur refinery in December.

The hydrocrackers are designed to capitalize on high crude oil and low natural gas prices, and produce primarily diesel. Each of the units cost about $1.6 billion to build.

Valero shares rose $1.15, or 3.4 percent, to $35.69 in afternoon trading Friday.

In its earnings outlook, Valero said it expects to post a profit attributable to shareholders of between 80 cents and 90 cents per share. The estimate includes charges of about $29 million, or 5 cents per share, related to the company's spin off of CST brands.

Analysts, on average, expect earnings of $1.15 per share, according to FactSet. The estimates typically exclude one-time items.

Valero said that profits at its refining segment are estimated to fall from year-ago levels, mainly as a result of significantly lower discounts for heavy sour crude oil, along with higher natural gas, environmental and maintenance costs.

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