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Phillips 66 Posts Weak First-Quarter Earnings

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May. 1 2019, Published 1:43 p.m. ET

Phillips 66’s refining earnings stand negative

On April 30, Phillips 66 (PSX) posted its first-quarter earnings, which surpassed Wall Street’s estimates. For more on this, you can refer to Phillips 66’s Earnings Surpass Wall Street’s Expectations. Now let’s look at earnings at the segmental level.

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In the first quarter, Phillips 66’s (PSX) total adjusted pre-tax income stood at $0.3 billion, which fell by 53% YoY. Phillips 66’s adjusted Refining earnings fell from $110 million in Q1 2018 to -$219 million in Q1 2019. Thus, the Refining segment dented PSX’s total adjusted income in the first quarter, which was due to the fall in the refining margins and throughputs.

Phillips 66’s worldwide refining margin fell by $2.1 per barrel YoY to $7.2 per barrel in Q1 2019, which was due to lower refining margins in three of its four operating regions. For more on refining margins, read Did Phillips 66’s Refining Margin Slump in Q1?

Phillips 66’s refining capacity utilization fell from 89% in Q1 2018 to 84% in Q1 2019. The fall in throughputs was due to planned maintenance and unplanned downtime in the quarter.

Other segments support total earnings

The Midstream and Chemicals segments contributed $316 million and $227 million to the total earnings, respectively, in Q1 2019. Thus, these segments supported the company’s overall earnings. Midstream earnings increased due to higher transportation and NGL earnings. The marketing segment contributed $205 million to total earnings, the third highest contribution. Marketing earnings fell 8% YoY in the first quarter, led by a narrower fuel marketing margin in the US. Corporate and other expenses dented total earnings by $210 million in Q1 2019.

Peers’ segmental performance

Valero Energy’s (VLO) operating earnings fell by 62% YoY to $308 million in Q1 2019, which was due to a fall in Refining and Ethanol earnings. Plus, VLO’s Renewable diesel earnings fell in the quarter.

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