(Reuters) - Independent U.S. refiner Valero Energy Corp VLO.N 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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