Oct 24 (Reuters) - Refiner Valero Energy posted

an 86% slump in third-quarter profit on Thursday on falling

refining margins, but it managed to beat Wall Street

expectations.

Globally, refiners have seen a drop in their

profitability on soft consumer and industrial demand, especially

in China.

U.S. refinery margins, measured by the 3-2-1 crack spread

, dipped to $14.28 in mid-September, the lowest since

early 2021, on lackluster fuel demand.

Energy majors like Exxon Mobil ( XOM ), BP and Shell

had said earlier this month that they expected weaker

refining margins to weigh on their earnings in the third

quarter.

Valero's net income attributable to stockholders plunged

to $364 million, or $1.14 per share, in the quarter from $2.6

billion, or $7.49 per share, a year earlier.

However, data compiled by LSEG showed analysts had expected

a profit of 98 cents.

Valero, which is the second-largest U.S. refiner by

capacity, saw refining margins falling to $2.41 billion from

$5.41 billion last year in the same quarter.

Valero's refining segment reported operating income of $565

million for the third quarter, compared with $3.4 billion a year

earlier.

However, analysts at Tudor, Pickering & Holt said

relative to their profit estimates, all three segments of the

company -refining, renewable diesel and ethanol - posted results

"a touch higher."

Revenue came in at $32.87 billion, compared with

estimates of $31.13 billion per data from LSEG, partially on an

18.4% rise in sales volumes for renewable diesel.

Additionally, the Texas-based refiner showed a higher payout

ratio for the quarter, coming in at 84% against 68% in the same

quarter last year, while its interest expense fell nearly 88%.

Its total throughput volumes, or amount of crude

processed, averaged 2.9 million barrels per day (bpd) in a heavy

maintenance season, compared with 3 million bpd and a 95%

refinery utilization a year earlier.