HOUSTON -(Dow Jones)- Valero Energy Corp. (VLO) posted a $438 million loss in the fourth quarter as charges incurred from the sale of its refineries offset higher refining margins and stronger sales.

Valero, the largest U.S. independent refiner, posted profits of 32 cents per share on continued operations for the quarter, up from a year-earlier loss of 23 cents a share but just missing analyst expectations. Charges the company took from selling its Paulsboro and Delaware City refineries to PBF Energy Company LLC during the quarter pushed Valero's bottom line to a loss of 77 cents a share, compared with a loss of $2.51 a share for the year-ago period.

Overall, Valero's revenue from continued operations climbed 24% to $22.16 billion.

Analysts surveyed by Thomson Reuters expected a profit of 34 cents a share on revenue of $21.21 billion.

Valero and other U.S. refiners are starting to post higher revenues as global distillate demand grows even as U.S. gasoline demand remains poor. The industry has seen domestic sales plummet because of government regulations calling for more fuel efficiency, as well as high unemployment brought on by the recession.

Valero Chief Executive Bill Klesse said he was optimistic that the company would continue to enjoy strong exports of distillates to Western Europe, where refinery outages have left the region short of diesel fuel, and South America, where the coming winter season will drive up demand for heating oil.

U.S. gasoline sales would remain sluggish, however, as the country continues to fight a 9.1% unemployment rate.

"(Gasoline demand) will come up a little bit as the economy keeps improving," Klesse told investors during a conference call. "Distillates look a lot better because it is pulled more heavily from the world."

Valero said its Canadian and U.S. retail operations brought in a combined $346 million in earnings for 2010, the second-highest results for the segment in the company's history. Income for its Canadian retail segment was a record-high $146 million for the year.

Valero and other U.S. refiners are also lowering their operating costs by using heavy, sour crude oil types that are cheaper but more difficult to process than more traditional types. The company said sour crude supply from the Gulf of Mexico has stabilized after falling in 2010 because of production problems.

Processing lower-quality crudes helped the company bring operating costs down to $3.64 a barrel from $3.90 a barrel in fourth quarter of 2009.

Klesse also said the company may seek a partner to help it update its 235,000-barrel-a-day Aruba refinery, which it is bringing back up after about 18 months of extensive maintenance work. The plant partly refines crude oil before shipping it to Valero's U.S. facilities for completion.

Shares rose more than 3% to $25.10 on Wednesday.

(John Kell contributed to this report.)

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