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Energy

Valero Takes It on the Chin (VLO)

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By Douglas A. McIntyre Updated Published
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Oil_refinery_image_Valero Energy Corporation reported earnings this morning, and it’s not pretty. The company had a net loss of $3.3 billion, or EPS of -$6.36. The loss includes an impairment charge against goodwill of $4.1 billion. Excluding the non-cash charge, Valero earned $732 million (EPS of $1.41), considerably higher than EPS estimates of $0.89. Revenue totaled $18.57 billion, slightly below analysts’ estimates of $18.86 billion.

The company’s operating income was up primarily from higher margins ondiesel and jet fuel. Retail margins were also listed as "strong" butmargins on gasoline were lower and refinery throughput was also loweroverall.

Valero expects 2009 to bring a "sluggish economy" that will diminishdemand for refined products. To meet that demand drop, the company willclose its entire Texas City refinery during scheduled maintenance, notjust the portions it plans to work on. The company’s fluid catalyticcracking units, which primarily make gasoline, are running at 70% to75% of capacity. Capital spending will be lower in 2009 than previouslyestimated: $2.7 billion vs. $3.5 billion.

Valero shares opened lower this morning, and are now down more than 5%,to $24.45. No real surprise there.  Its 52-week trading range is $13.94to $62.97.

Paul Ausick
January 27, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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