Valero Energy beats third-quarter profit estimates on stronger margins

By Nicole Jao

(Reuters) -U.S. refiner Valero Energy, kicking off the earnings season for refiners, posted better-than-expected third-quarter results on Thursday as refining margins remained supported throughout the quarter and refinery throughput in the Gulf Coast and North Atlantic regions reached new highs.

Shares of the company were up 6.8% at $172.90 on Thursday afternoon.

Fuel makers have benefited from a rebound in refining margins from multiyear lows in 2024 as supply shortages tied to geopolitical tensions in Ukraine supported stronger pricing.

"Refining margins remained well-supported by strong global demand and persistently low inventory levels despite high utilization rates," Chief Executive Lane Riggs told analysts on a conference call on Thursday.

U.S. refinery margins, measured by the 3-2-1 crack spread, in the third quarter rose nearly 29% on average from a year earlier.

Valero's results, supported by high refining throughput as well as improved renewable diesel margins, beat expectations, Jason Gabelman, an analyst with TD Cowen, said in a note.

The company reported a quarterly profit of $3.66 per share compared with analysts' expectations of $3.05, according to data compiled by LSEG.

During the quarter, Valero's refineries operated at 97% of their combined total throughput capacity, with refineries in the Gulf Coast and North Atlantic regions setting all-time highs.

The company's average throughput volume rose to 3.1 million barrels per day in the quarter, from 2.9 million bpd a year earlier.

The San Antonio, Texas-based refiner plans to operate its 15 refineries at up to 95% of their throughput capacity of 3.2 million bpd in the fourth quarter.

Valero's refining margin per barrel of throughput jumped over 44% to $13.14 in the quarter, compared with $9.09 a year earlier.

The refining segment reported $1.6 billion of operating income, compared with $565 million for the same period a year ago.

(Reporting by Nicole Jao in New York and Vallari Srivastava in Bengaluru; Editing by Krishna Chandra Eluri and Matthew Lewis)

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