VLO Valero Energy Corporation

Valero Energy Corp. reported its profit nearly halved in the first quarter of the year as the refiner's margins contracted on depressed gasoline and crude oil prices.

Shares slipped 2.9% to $58.10 midday.

Chief Executive Joe Gorder said the company's pursuit of "safe, reliable, low-cost operations" delivered solid operating performance in the quarter despite lower product margins.

In Valero's refining business, operating earnings skidded 56% to $695 million, owing to weaker distillate margins given high refining industry production levels and a warm winter. Operating earnings in the ethanol segment fell 25% to $9 million as production volumes were essentially flat. The company said it expects recent increases in crude oil and gasoline prices should improve ethanol margins in the second quarter.

Mr. Gorder said the company is optimistic about product demand.

"Here in the U.S., distillate inventories have shown favorable reductions recently, and the summer driving season is quickly approaching, which should support gasoline margins," he said. "We also expect the strong export demand we experienced in the first quarter to continue."

Overall, Valero reported a profit of $495 million, or $1.05 a share, down from $964 million, or $1.87 a share, a year earlier. Adjusted earnings fell to 60 cents a share from $1.87 in the quarter last year. Revenue skidded 26% to $15.71 billion.

Analysts polled by Thomson Reuters had expected adjusted earnings of 66 cents a share on revenue of $13 billion.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

May 03, 2016 13:15 ET (17:15 GMT)

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