(Reuters) Refiner Valero Energy beat Wall Street estimates for second-quarter earnings, despite reporting lower profits from the previous year, as a rebound in refining margins helped cushion losses in the renewable diesel segment.
Its shares were down around 4% at noon.
The first major refiner to post results this earnings season, Valero reported a profit of $2.28 per share for the second quarter, down from $2.71 per share for the same period a year ago but beating analysts' average estimates for $1.74 per share.
The renewable diesel segment, consisting of the Diamond Green Diesel joint venture, reported an operating loss of $79 million for the quarter, compared with a profit of $112 million a year ago.
Operating losses from the renewable diesel operations remain small relative to the profits generated by the refining segment, said Stewart Glickman, energy equity analyst at CFRA Research.
For the second quarter, the refining segment reported quarterly operating income of $1.3 billion, up from last year's $1.2 billion, boosted by higher margins.
Refining margin per barrel of throughput was up at $12.35 in the second quarter, compared with $11.14 from a year earlier, the San Antonio, Texas-based refiner said.
"We set a record for refining throughput rate in our U.S. Gulf Coast region in the second quarter," said CEO Lane Riggs.
Valero said it plans to operate refineries up to 94% of combined total capacity in Q3 2025.
The pending closure of its Benicia refinery near San Francisco in April next year will remove around 5% of its refining capacity and 9% of California's crude oil capacity.
Reuters reported this week the California government is trying to find a buyer for the Benicia refinery.
"There's a genuine desire for [the California government officials] to avoid the refinery closure, but there's no solutions that have materialized, at least not from our perspective," said Rich Walsh, general counsel at Valero.
"Nothing has changed in our plans."
