Valero reports lower ethanol profits, renewable diesel losses, while SAF operations perform well despite sluggish airline demand and market uncertainty.
Valero Energy Corp. released its financial results for the second quarter on July 24, reflecting mixed outcomes across its Renewable Energy segments. While the ethanol business remained profitable, earnings saw a significant decline compared to the same period last year. Meanwhile, the renewable diesel segment reported a notable loss. On a positive note, the company’s new sustainable aviation fuel (SAF) unit is now fully operational and performing effectively.
The ethanol segment posted an operating income of $54 million for Q2 2025, marking a steep drop from $105 million recorded in Q2 2024. Ethanol production levels held steady, averaging 4.6 million gallons per day. Despite the reduced earnings, this segment continues to generate profits and remains a stable contributor to Valero’s overall business.
Conversely, the renewable diesel segment, operated through the Diamond Green Diesel (DGD) joint venture, reported an operating loss of $79 million in the second quarter. This represents a sharp downturn from the $112 million operating income reported during the same quarter last year. Sales volumes for renewable diesel averaged approximately 2.7 million gallons per day, indicating a dip in both output and financial returns.
DGD’s latest SAF initiative at its Port Arthur facility in Texas became fully functional in January 2025. This project allows for the conversion of up to 50% of the plant’s current annual production capacity of 470 million gallons into SAF. According to Eric Fischer, Valero’s Senior Vice President of Product Supply, Trading, and Wholesale, the SAF unit is operating efficiently. He highlighted that both logistics and the blending of SAF with jet fuel have been smooth, and the integration into Valero’s Jet Fuel infrastructure has proven successful.
However, Fischer acknowledged a slower-than-anticipated market uptake for SAF, especially among airlines. He suggested that industry players are still evaluating the market dynamics. Nevertheless, Fischer remains optimistic, predicting that demand may increase in the latter half of the year, particularly in response to SAF mandates coming into effect across Europe.
Looking ahead to Q3, Valero expects ethanol production to remain steady at 4.6 million gallons per day. For the full year 2025, sales from the renewable diesel segment are projected to reach around 1.1 billion gallons. This projection reflects a conservative estimate, taking into account lower production driven by current economic conditions.
Despite challenges in certain segments, Valero reported a net income attributable to its shareholders of $714 million, or $2.28 per share, for Q2 2025. This is down from $880 million, or $2.71 per share, recorded in the same quarter last year, indicating an overall decline in earnings.
