:max_bytes(150000):strip_icc()/GettyImages-2107852877-84eefaab6bd2452784d13a3b3bf22693.jpg "Phillips 66’s Refining Margins Sink, Dragging Down Profits")
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Key Takeaways
- Phillips 66 reported a drop in first-quarter profits as refining margins thinned.
- The energy company’s realized refining margins were nearly half what they were in the first quarter of 2023.
- The company noted its results were affected by maintenance, which limited its ability to produce higher-value products.
Phillips 66 (PSX) shares dropped in intraday trading Friday after the energy producer’s quarterly profit fell as refining margins thinned.
The company reported first-quarter net earnings slumped 61.9% to $748 million, with adjusted earnings of $822 million, or $1.90 per share, short of estimates. Revenue rose 3.8% to $36.44 billion, ahead of forecasts.
Phillips 66 noted that its realized refining margins dropped to $10.91 per barrel, nearly half of what they were a year earlier. Market capture, which measures refining profit to industry standards, fell to 69% from 93%.
Chief Executive Officer (CEO) Mark Lashier explained that the results “were affected by maintenance that limited our ability to make higher-value products.” He added profits were also impacted by the conversion to renewable fuels at the company’s Rodeo, Calif., refinery, and rising commodity prices affecting its inventory hedge positions.
Shares of Phillips 66 hit an all-time high earlier this month, and even with today’s 3.7% selloff to $151.48 as of 10:45 a.m. ET, they are up about 14% year-to-date.