Earnings Climb at Valero - TheStreet

Earnings Climb at Valero

Revenue falls year over year.
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Refining concern

Valero

(VLO) - Get Report

said Tuesday that its net income jumped 16% in the second quarter of 2007.

San Antonio-based Valero earned $2.2 billion in the quarter, or $3.89 a share, up from $1.9 billion, or $2.98 a share, one year earlier. The results beat out the $3.76 estimate, according to a Thomson Financial analyst survey.

High refining margins and strong demand for petroleum products like gasoline were responsible for the improved results, said CEO Bill Klesse, in a press statement.

"Gulf Coast gasoline margins averaged nearly $29 per barrel, which is 45% higher than in the second quarter of last year," Klesse said. "We are in a great refining environment."

He admitted that refining margins have recently fallen from their springtime best, but he said that crack spreads for refined products are still high in a historical context.

The company generated revenue of $24.2 billion, down 5.7% from the $25.6 billion it generated a year ago.

Rising costs were partially offset by higher throughput, according to CFO Mike Ciskowski. Valero spent $592 million on capital spending in the quarter, $101 million of which went toward refinery turnarounds.

Shares of Valero were recently trading 1.4% lower at $68.12.