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Why Phillips 66’s Diversified Growth Model Matters

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Part 12
Why Phillips 66’s Diversified Growth Model Matters PART 12 OF 12

Behind Phillips 66’s Segmental Earnings Trends

Phillips 66’s segmental earnings

Phillips 66’s (PSX) total adjusted net income rose 14% YoY (year-over-year) to $569 million in 2Q17. PSX’s Refining segment rose from $152 million in 2Q16 to $233 million in 2Q17.

Though its refining margins rose YoY, they were offset by lower crude oil throughputs YoY. The highest contributor to Phillips 66’s total adjusted net income was the Refining segment, which added 41% to PSX’s total adjusted income.

Behind Phillips 66’s Segmental Earnings Trends

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PSX’s Chemicals segment, which rose 3% YoY to $196 million in 2Q17, contributed 34% to the company’s total adjusted earnings. PSX’s Midstream segment earnings rose from $39 million in 2Q16 to $64 million in 2Q17, due to higher DCP Midstream (DCP) earnings.

Although PSX’s Marketing and Specialty noted a decline in earnings, it made the second-highest contribution of 38% to PSX total adjusted earnings. PSX’s Marketing and Specialty earnings fell to $218 million in 2Q17, down from $229 million in 2Q16, due to lower volumes. Corporate and other expenses dented earnings by $142 million in 2Q17.

Phillips 66’s refining margin in 2Q17

PSX’s worldwide refining margin rose $1.3 per barrel, or 18%, over 2Q16 to $8.4 per barrel in 2Q17. The Gulf Coast region observed the biggest rise of 30%, or $1.6 per barrel, in the refining margin over 2Q16.

The Atlantic Basin and Europe registered a 28% YoY, or $1.8 per barrel, increase in the refining margin, while the margins in the Central Corridor rose 15% YoY, or $1.3 per barrel, in 2Q17. The West Coast refining margin fell 1% YoY in 2Q17.

Peer refining margins

Valero Energy (VLO) noted a rise in its gross refining margin, by $0.07 per barrel over 2Q16 to $8.66 per barrel in 2Q17. But Marathon Petroleum’s (MPC) gross refining and marketing margin fell $1.4 per barrel over 2Q16 to $11.3 per barrel in 2Q17.

Andeavor (ANDV) noted a fall in its gross refining margin, by $6.3 per barrel YoY to $9.5 per barrel in 2Q17.

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