Valero reported first quarter earnings on Tuesday. Results were less than impressive at a loss of $101M $0.18 per share. This result beat the $0.27 consensus loss of the 16 analysts covering. Valero's operating loss was $32 million, versus first quarter 2009 operating income of $593 million. This decline in operating income can be attributed to lower margins on their refined products across all regions. Operating results were also negatively impacted by downtime in some of their key refineries, which management estimates resulted in $200M of lost income. Despite the rough operating environment, Valero managed increase their liquidity position by $4B. Management also purchased an additional 3 plants this quarter, which brings their total to 10, increasing their capacity to 1.1 Billion barrels a year.
For the second quarter and the rest of 2010, management expects to be profitable. They believe that their cost savings initiatives and strategic actions will help them achieve profitability, even if they continue to operate in a low margin environment.
I am planning on locating the original model and updating it and making a decision going forward.
- Thomas Boeje