Valero Earnings Propped Up by Ethanol; Phillips 66 Gets No Such Help

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Oil refiner Valero Energy Corp. (NYSE: VLO) reported fourth-quarter and full-year 2013 earnings before markets opened Wednesday. Adjusted earnings per share (EPS) for the quarter totaled $1.78, which excludes a non-taxable gain of $0.60 per share related to Valero’s disposal of its interests in CST Brands. Adjusted EPS a year ago totaled $1.88. Quarterly revenues totaled $34.43 billion, compared with revenues of $34.7 billion in the fourth quarter of 2012. The consensus estimate called for EPS of $1.66 on revenues of $30.85 billion.

For the full year, Valero posted adjusted EPS of $4.42 on revenues of $138.07 billion compared with 2012 $5.59 EPS and revenues of $139.25 billion. The consensus estimates called for EPS of $4.41 on $134.24 billion in revenues.

Operating income in the fourth quarter was flat at $1.6 billion. Valero’s oil refining income fell and the company said the decline was offset by operating income increases in its ethanol segment.

The company did not offer guidance in its earnings release, but consensus estimates call for first-quarter EPS of $1.13 on revenues of $29.34 billion. For 2014 EPS is forecast at $5.64 on revenues of $118.89 billion.

The company’s CEO said:

Our refineries and ethanol plants ran well and at a high utilization rate in the fourth quarter. In refining, we took advantage of favorable crude oil discounts at most locations, while our ethanol business enjoyed high margins and set a record high for quarterly and annual operating income.

Phillips 66 (NYSE: PSX) also reported earnings Wednesday morning, posting adjusted fourth-quarter EPS of $1.34 on revenues of $43.84 billion, compared with EPS of $2.06 and revenues of $44.62 billion a year ago. The consensus estimates called for $1.10 EPS on revenues of $42.11 billion. For the full year, Phillips 66 posted EPS of $6.02 on revenues of $174.81 billion, compared with consensus estimates for EPS of $5.64 on revenues of $181.01 billion.

The company’s refining margins were hit by weaker crack spreads everywhere except the U.S. Gulf Coast. Exports of refined products enjoyed significant positive differentials to world prices as well.

Shares of Valero were trading up 0.5% in Wednesday’s premarket, at $50.45 in a 52-week range of $33.00 to $53.64. The consensus target price for the shares was around $56.50 before the report.

Phillips 66 stock was trading down about 3%, at $72.78 in a 52-week range of $54.80 to $79.00. The consensus target price for the shares was around $84.10.

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