Biggest Loser?

Valero makes Fortune list of "red ink spillers"; retail bright spot

SAN ANTONIO, Texas -- Valero Energy Corp. punched in at No. 15 on Fortune magazine's list of The Fortune 500's "Biggest Money Losers." It ranked No. 26 in the Fortune 500 list, with a 2009 loss of $2 billion. In 2008, Valero ranked No. 16 on the Fortune 500 with profits of $5.2 billion. Supermarket company Supervalu and drug store chain Rite Aid also made the list.

The magazine said, "These days it's a different world for the refiner, which in the past year faced its worst market for fuel in almost three decades. Refineries have operated well below capacity as gasoline [image-nocss] demand dropped during the recession. The company shut down its Delaware City, Del., refinery, which was losing $1 million a day, and took an almost $2 billion loss.

"Valero processes medium and heavy crude, which is cheaper to buy but costlier to process than other varieties. During the downturn, the price of crude climbed, hurting profits. One upside may be the company's move into the ethanol business. It acquired several refineries this year, and the new business unit bumped its operating income by $165 million."

Although not dealt with in the magazine article, Valero's retail segment is another one of its bright spots. For example, while it reported a total net loss of $219 million in third-quarter 2009, the company's "retail business had the highest third-quarter and year-to-date operating income in company history," according to CEO Bill Klesse. (Click here for previous CSP Daily News coverage.)

Also, Mike Ciskowski, executive vice president and CFO of Valero Energy Corp., said on the company's fourth-quarter earnings call in late January, "Retail has continued to produce strong results with operating income in the fourth quarter of 2009 at $61 million, which is less, though, than the $163 million in the fourth quarter of 2008, mainly due to lower fuel margins in the U.S., which were partially offset by lower selling expenses. For the full-year 2009, retail earned at $293 million of operating income, making it the second-best year for retail." (Click here for previous CSP Daily News coverage.)

The Fortune list, which was topped by Fannie Mae, included financial, energy, media, communications, technology and retail companies:
Fannie Mae (mortgages; Fortune 500 rank: 81; 2009 loss: $72 billion). Freddie Mac (mortgages; Fortune 500 rank: 54; 2009 loss: $21.6 billion). American International Group (insurance; Fortune 500 rank: 16; 2009 loss: $10.9 billion). GMAC (automobile financing; Fortune 500 rank: 122; 2009 loss: $10.3 billion). Symantec (PC security; Fortune 500 rank: 353; 2009 loss: $6.7 billion). Chesapeake Energy (natural gas; Fortune 500 rank: 296; 2009 loss: $5.8 billion). CC Media Holdings (radio, billboards; Fortune 500 rank: 376; 2009 loss: $4 billion). News Corp. (newspapers; Fortune 500 rank: 76; 2009 loss: $3.4 billion). Rite Aid (drug stores; Fortune 500 rank: 89; 2009 loss: $2.9 billion). Supervalu (supermarkets; Fortune 500 rank: 47; 2009 loss: $2.9 billion). Devon Energy (oil and natural gas; Fortune 500 rank: 261; 2009 loss: $2.5 billion). Sprint Nextel (wireless; Fortune 500 rank: 67; 2009 loss: $2.4 billion). MetLife (insurance; Fortune 500 rank: 51; 2009 loss: $2.2 billion). Sun Microsystems (technology; Fortune 500 rank: 204; 2009 loss: $2.2 billion). Valero Energy (petroleum, ethanol; Fortune 500 rank: 26; 2009 loss: $2 billion). State Street Corp. (banking; Fortune 500 rank: 249; 2009 loss: $1.9 billion). Micron Technology (technology; Fortune 500 rank: 432; 2009 loss: $1.8 billion). Citigroup (banking; Fortune 500 rank: 12; 2009 loss: $1.6 billion). SunTrust Banks (banking; Fortune 500 rank: 224; 2009 loss: $1.6 billion). AbitibiBowater (newsprint; Fortune 500 rank: 472; 2009 loss: $1.6 billion). Click here for details on each company.