UPDATE 4-Valero Energy's Q4 profit beat Wall Street estimates
(Recast first paragraph and headline to show company beat Wall Street estimates)
By Sourasis Bose
Jan 25 (Reuters) - Refiner Valero Energy's fourth quarter earnings beat Wall Street estimates on better than expected results from refining and ethanol production, the company said on Thursday.
Overall results in the fourth quarter of 2023 fell. Results pulled back from record levels touched in 2022 following Russia's invasion of Ukraine.
San Antonio, Texas-based Valero said its refining margin for the quarter fell to $3.55 billion from $6.32 billion in the previous year.
Heavy maintenance activities in the near term would provide support to refining margins, ahead of the summer driving season.
The U.S. energy firm's 14 refineries are scheduled to operate between 83% and 86% of their combined total throughput capacity in the first quarter.
Valero said it has also seen a spike in freight rates due to the Red Sea attacks, with the cost of transporting crude from the U.S. Gulf Coast to Northwest Europe surging almost three times.
"It gives us a crude cost advantage versus our global competitors," Chief Operating Officer Gary Simmons said in a conference call.
Valero said its throughput capacity utilization was 94% in the fourth quarter.
Its total refinery throughput volumes averaged 3 million barrels per day in the quarter, marginally lower than last year.
U.S. refiners were operating at 93% utilization in recent weeks to meet seasonal distillates demand, which spikes in winter due to heating needs and make up for downtime during the fall.
Valero's net income fell to $1.2 billion, or $3.55 per share, for the three months ended Dec. 31, compared with the year earlier, but beat LSEG estimates of $2.96 per share.
Analysts attributed the beat to stronger-than-expected margins in its North Atlantic operations and ethanol business.
Valero said it expects 2024 capital investments to be about $2 billion. (Reporting by Sourasis Bose in Bengaluru; Editing by Devika Syamnath, Shilpi Majumdar and Lincoln Feast.)
