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Home Oil & Gas Press Releases (UPDATE) 2-Valero warns of up to $2.1 billion first quarter loss on...

(UPDATE) 2-Valero warns of up to $2.1 billion first quarter loss on demand drop

(Adds background, SEC inquiry, company, analyst comment)

April 13 (Reuters) – Independent U.S. refiner Valero Energy
Corp warned of an up to $2.1 billion first quarter loss
and withdrew its full-year outlook on Monday, as lockdowns to
suppress the coronavirus hit demand for its gasoline, jet fuel
and other products.

Refiners have cut production and slashed expenses to
confront a 30% drop in worldwide fuel demand as countries impose
restrictions on airlines and businesses to reduce the spread of
the virus. U.S. gasoline demand fell nearly 50% in the three
weeks ended April 3.

While withdrawing its earnings forecast for 2020, Valero
also said it was taking steps to improve liquidity, including by
deferring tax payments and certain planned expenses in its
refining and ethanol businesses.

The refiner has access to $5 billion in capital and is “an
investment grade, high quality balance sheet company…and low
cost operator,” a Valero spokeswoman said declining other
comment.

It has deferred about $100 million of tax payments due in
the first quarter ended March 31, and plans to defer remaining
tax payments for 2020 as much as it can, it said.

“We see these measures as prudent and credit supportive,”
said Elena Nadtotchi, an analyst at debt rating firm Moody’s
Investors Service.

First-quarter revenue will be between $20.1 billion and
$22.2 billion, and net loss attributable to stockholders between
$1.83 billion and $2.1 billion, the company said in a statement.

First quarter results are scheduled to be released on April
23.

Projected loss would mark a steep decline from the same
period last year when it reported revenue of $24.26 billion and
net income of $141 million.

On an adjusted basis, the company said it expects first
quarter results to range between a loss of $200 million to a
profit of $160 million.

Separately, Valero said it received an informal inquiry from
the U.S. Securities and Exchange Commission over how it stated
executive benefits in its 2020 proxy. It filed an amended proxy
showing top executives’ pay was understated by between $7,600
and $24,500 in the original filing.
(Reporting by Shariq Khan in Bengaluru; Editing by Shinjini
Ganguli, Gary McWilliams and Tom Brown)

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