By the OGJ Online Staff
HOUSTON, Jan. 29 -- Valero Energy Corp., San Antonio, said Tuesday its 2001 net income was $563.6 million, or $8.83/share, compared with $339.1 million or $5.60/share a year earlier.
Net income for the fourth quarter was $51.6 million, or 82¢/share, compared with $93.3 million or $1.47/share a year earlier.
Full-year earnings before income tax, depreciation, and amortization were $1.2 billion, and the company's return on equity was 30%.
Operating income for the year was a record $1 billion, compared to $611 million in 2000, but in the fourth quarter it fell to $111.7 million, vs. $170.9 million for the same period of 2000.
Valero said the decline was due to the decrease in gasoline and distillate margins from the high levels of late 2000. It said the decline was partially offset by processing more sour crude oil, higher throughput volumes, and an $8.8 million pre-tax, or 9¢/share after-tax, benefit attributable to the acquisition of Ultramar Diamond Shamrock Corp.'s (UDS) inventories at Dec. 31, 2001.
Bill Greehey, Valero's chairman and CEO, said, "Not only did we achieve record earnings of $8.83/share, but we more than doubled the size of our company in terms of assets and revenues. In the process, we added more than 900,000 b/d of throughput capacity, acquired an extensive midstream logistics business, and became one of the nation's largest retailers. We accomplished this by acquiring UDS, El Paso Corp.'s Corpus Christi refinery, and Huntway Refining Co., and by making significant strategic investments in our existing refining system. These investments were primarily focused on our ongoing strategy of enhancing our feedstock flexibility and improving the yield of higher value products."
He noted industry margins in the fourth quarter were more than 40% lower than a year ago, but Valero's margin fell only 20%.
He said January margins have weakened even more, due to mild weather and lower distillate demand, and discounts for sour crude oil feedstocks have narrowed.
"However, we are encouraged by the fact that refinery utilization rates have remained low and, with the heavy turnaround schedule this quarter and economically driven run cuts, inventories should quickly decline from current levels. On the demand side, we have seen continued strong seasonal gasoline demand, as many consumers have opted to drive rather than fly."
Greehey said the integration of Valero and UDS has gone well, and the merged company should achieve $200 million in synergies in 2002 and more than double that over the next 3 years.
