Valero profit beat projections due to higher gasoline prices, lower-than-expected costs
July 25 (Reuters) - Valero Energy Corp on Thursday beat analysts' estimates for quarterly profit, driven by a rebound in gasoline prices and as the independent U.S. refiner processed more crude at lower-than-expected costs.
The beat comes at a time when U.S. refiners have been facing a lack of low-cost heavy crude in the market following mandatory production cuts by Canada's Alberta government and the Organisation of Petroleum Exporting Countries as well as sanctions on Venezuela and Iran.
"We saw a strong rebound in gasoline cracks in all regions in the second quarter," Chief Executive Officer Joe Gorder said in a statement.
Gasoline prices rose due to supply concerns in the quarter, as refiners planned more downturns and upgrades than usual, while flooding in the U.S. Midwest added to the gains.
Credit Suisse analyst Manav Gupta flagged higher-than-expected earnings at all refining units of the company. Valero's total throughput was 2.6% above the brokerage's estimates, while operating expenses per barrel was 6.2% lower than its estimates.
Throughput volumes, or the total volume of crude oil processed, rose 2.4% to 2.97 million barrels per day (bpd) in the quarter ended June 30.
The San Antonio, Texas-based company's refining margins fell to $9.56 per barrel in the quarter, from $11.12 a year earlier, with operating cost per barrel climbing 1.3%.
Adjusted net income attributable to Valero shareholders fell 32.2% to $629 million. The company earned $1.51 per share in the quarter, beating analysts' estimates of $1.37 per share, according to IBES data from Refinitiv.
Valero's refineries ran at a utilization rate of 94% in the quarter, compared with 93% a year earlier.
Valero is the first major U.S. refiner to announce results for the quarter, with Phillips 66 set to report on Friday and Marathon Petroleum next week.
Shares of Valero marginally rose to $86.83 in premarket trading. (Reporting by Debroop Roy in Bengaluru; Editing by Shinjini Ganguli and James Emmanuel)
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