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How Valero’s Segmental Earnings Trended in Q1

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Valero’s segmental analysis

Valero Energy (VLO) posted its first-quarter results on April 25. The company beat analysts’ estimate. To learn more, read Valero’s Q1 Earnings Surpass Analysts’ Estimate. Now, we’ll review Valero Energy’s segmental earnings trend.

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Valero Energy’s operating earnings fell 62% YoY to $308 million in the first quarter due to a fall in its refining and ethanol earnings. The company’s renewable diesel earnings fell in the quarter.

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Valero Energy’s refining earnings fell 41% YoY to $479 million in the first quarter due to the weaker refining margin and lower throughput. Valero Energy’s refining margin fell by $0.7 per barrel YoY to $8.0 per barrel in the first quarter. Read Why Did Valero’s Refining Margin Tumble in Q1 2019? to learn more. The company’s throughput fell from 2.93 MMbpd (million barrels per day) in the first quarter of 2018 to 2.87 MMbpd in the first quarter.

Ethanol earnings

Valero Energy’s operating income from the ethanol segment fell from $45 million in the first quarter of 2018 to $3 million in the first quarter due to the fall in ethanol prices.

The ethanol segment’s gross margin narrowed from $0.47 per gallon in the first quarter of 2018 to $0.40 per gallon in the first quarter of 2019. However, Valero Energy’s ethanol production rose from 4113 thousand gallons per day in the first quarter of 2018 to 4217 thousand gallons per day in the first quarter.

Renewable diesel

Valero Energy’s renewable diesel segment shows the activities of its joint venture with Diamond Green Diesel. The segment’s operating earnings fell 75% to $49 million in the first quarter. However, excluding the special items, the renewable diesel segment’s earnings rose 40% YoY due to higher volumes driven by the expansion of the plant in the third quarter of 2018.

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