Refining and Marketing segments’ results decreased 2Q14 earnings

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Net income for Marketing and Refining segments are down

The net income for Phillips 66’s (PSX) Refining and Marketing segments decreased in the 2Q14 earnings.

Segmentwise Net Income

Refining segment

PSX’s 2Q14 net income for the Refining segment decreased 14% to $390 million—from $455 million in 2Q13.

The lower refining margin was a result of an industry-wide slow down in the refining business. PSX’s refinery configuration produced more distillate than the 3:2:1 standard. This was combined with weaker distillate cracks. This led to weaker earnings during the reported quarter.

The negative impact was partially offset by higher crude capacity utilization. Brent crude was also replaced by lower priced crude.

For more information about how the crack spread and crude spread impacted the refining margin, read Part 11 in this series.

Revenues for the segment increased 19% to $14.8 billion during 2Q14.

Marketing & Specialties segment

PSX’s 2Q14 net income for the Marketing & Specialties segment decreased 53% to $162 million—from $344 million in 2Q13.

The segment’s earnings were negatively affected by a lower fuel marketing margin. Realized margins were $1.17 per barrel in 2Q14—compared to $1.77 per barrel 2Q13. However, the average sales price improved marginally by 2% and 2.6% for gasoline and distillates, respectively.

The segment’s sales volume remained almost unchanged during 2Q14—compared to the same period last year.

In 2Q14, total revenues for the segment increased marginally by 1% to $29.8 billion—compared to $29.4 billion in 2Q13.

Other companies in the refining sector include HollyFrontier Corp. (HFC), Valero Energy (VLO), and Marathon Petroleum Corporation (MPC). All of these companies are components of the Energy Select Sector SPDR ETF (XLE).

You can check out our discussion on Valero Energy’s latest quarter here.

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