US refiner Valero posts record quarterly profit as supply disruptions boost margins (updated)
UPDATE 3-US refiner Valero posts record quarterly profit as supply disruptions boost margins Adds comments, background throughout; updates share price
By Nicole Jao and Vallari Srivastava
NEW YORK, Oct 22 (Reuters) - Refiner Valero Energy VLO.N kicked off earnings season for US refiners on Thursday by posting its highest-ever quarterly profit, beating Wall Street expectations, as fuel supply disruptions due to wars in Iran and Ukraine boosted margins during the third quarter.
Diesel, used in manufacturing and agriculture, has hit record high prices, and gasoline prices are also elevated, creating pain for consumers and US President Donald Trump's Republican Party ahead of next month's midterm elections, but enriching refiners.
The 3-2-1 crack spread CL321-1=R, which measures US refinery margins, gained more than 150% during the July-September period, from a year earlier.
Valero said its refining margin per barrel of throughput nearly tripled to $39.24 in the quarter, with adjusted operating earnings in the refining segment jumping over 400% to $8.8 billion from a year earlier.
Valero shares were down 3%.
NO SIGNS OF SOFTENING DEMAND
The US, the world's largest crude oil producer and second-largest refiner after China, ramped up exports of crude, gasoline, diesel and jet fuel to record levels earlier this year, following war-driven supply disruptions.
"Export demand for diesel is also very, very strong, both to Latin America and Europe," Chief Operating Officer Gary Simmons said during a call with investors. He said economic and trucking industry indicators show demand for the fuel will remain robust.
US refiners are also running at 95% to 100% of capacity, with many delaying planned maintenance to benefit from high energy prices.
Valero plans to operate its refineries in the United States and Britain at 96% to 99% of their combined total throughput capacity of 3 million barrels per day in the fourth quarter.
Valero said it has completed an optimization project at its St. Charles refinery in Louisiana, increasing production capacity of alkylate and gasoline.
The Texas-based company posted adjusted profit of $23.90 per share, up about 553% from the same time last year.
"While the volatility is probably not behind us at this point, we're in a good position to be even more aggressive with shareholder returns," Chief Financial Officer Homer Bhullar said. "Whether margins and cash flow profile of our business remain strong or not, our long-term targets on cash have really not changed."
(Reporting by Nicole Jao in New York, Vallari Srivastava and Anushree Mukherjee in Bengaluru; Editing by Maju Samuel and Rod Nickel)
((Nicole.Jao@thomsonreuters.com; Twitter/X: @ByNicoleJao; +1 646 540 2216))