Valero Energy Corp (VLO)

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$VLO Valero -2% as Q2 refining, ethanol results slammed

Valero Energy (VLO -2.2%) slides after Q2 earnings match analyst consensus and revenues slip 6% Y/Y, as refining margins fell and higher corn prices cut into profits from ethanol sales.

VLO says Q2 operating income for its refining segment fell to $1B from $1.4B in the year-ago quarter, primarily driven by narrower discounts for medium and heavy sour crude oils relative to Brent crude.

But refinery throughput capacity utilization hit 94% for the quarter and volumes processed averaged 3M bbl/day in Q2, ~70K bbl/day more than in the year-ago quarter.

Higher corn prices cut ethanol profits by 83% to just $7M, compared to $43M in the prior-year quarter, and ethanol production volumes rose 13% Y/Y to 4.5M gal/day, largely due to added production from the three ethanol plants acquired last November.

Q2 operating income at VLO's renewable diesel segment rose to $77M vs. $30M in the year-ago quarter, as renewable diesel sales volumes nearly doubled to 769K gal/day.

VLO continues to expect capex of $2.5B in both 2019 and 2020, including ~40% for growth projects.