Boston, MA 05/22/2014 (wallstreetpr) – Valero Energy Corporation (NYSE:VLO) reported higher net income of $828 million with EPS of $1.54 in the first quarter of 2014 (1Q2014) compared to $654 million (EPS: $1.18) in the first quarter of 2013 (1Q2013).
Segment operating income
In 1Q2014, Valero’s operating income grew to $1.4 billion from $1.1 billion in 1Q2013 due to increase in operating income of the refining and ethanol segments that partly offset the reduction from divested retail unit (CST Brands).
During 1Q2014, the refining segment earned operating income of $1.3 billion, an increase of $67 million due to higher throughput margin and volumes that partially offset by increasing energy costs. The refining throughput volumes were 2.7 million barrels per day, up by 135K barrels per day versus prior year output. Despite declines in gasoline and diesel margins, Valero’s throughput margin improved as a result of the increase in light sweet and sour crude oil discounts compared to Brent in the Gulf Coast of the U.S.
The Company experienced logistic threats due to the challenging winter weather; however, the ethanol segment achieved record in its operating income that increased considerably to $243 million compared to $14 million in 1Q2013. The significant uptrend in operating income was mainly driven by higher gross margin per gallon and lower inventories, and decrease in import volumes as well as corn costs compared to last year.
So, the Company benefitted from ethanol segment and the investments of $34 million on ethanol plants Mount Vernon, Indiana expects to provide growth in earnings and cash flow in FY2014.
Capital spending
During 1Q2014, Valero’s capital expenditures were $517 million and expected ~$3 billion of capital spending including investment over logistics and refining projects in 2014 that will help to improve the processing capacity and increase access over cost advantage crudes.
Valero Energy Corporation (NYSE:VLO) repurchased shares of $226 million and paid a dividend of $133 million during the quarter and ended up with cash balances of $3.6 billion and $6.6 billion as total debt as of March 31, 2014.
Conclusion
Valero aims to increase energy production while upgrading the projects over high valued products in natural gas and natural gas liquids. It helps to generate long-term growth for Valero Energy Corporation (NYSE:VLO) as well as improves the shareholder’s value.
