MOSCOW (MRC) -- Phillips 66 reported a substantial 46% drop in its second-quarter profits, reflecting the challenges faced by U.S. refiners due to declining margins, said the company.
This decline comes after last year’s record-high margins, which were boosted by a surge in fuel demand and supply constraints caused by the pandemic-driven refinery closures and the global oil market disruptions resulting from Russia’s invasion of Ukraine. The company’s premarket trade showed its shares falling 1.2% to USD110.80.
During the second quarter, Phillips 66‘s realized margins plummeted to USD15.32 per barrel, a significant decrease from the USD28.62 per barrel reported in the same period last year. Despite the decline in margins, fuel demand has proven to be resilient. The April-June quarter typically witnesses robust demand, as companies ramp up gasoline and jet fuel production to cater to the summer vacation season.
In the second quarter, Phillips 66’s crude utilization rate was recorded at 93%, slightly higher than the 90% rate from the previous year. Additionally, the total processed input remained unchanged year-over-year at 1.9 million barrels per day (bpd).
On an adjusted basis, the Houston-based refiner reported earnings of USD3.87 per share for the three months ended June 30, surpassing the average analysts’ estimate of USD3.56, as per Refinitiv data.
Similar to Phillips 66, rivals Valero Energy Corp and Marathon Petroleum also reported considerable declines in quarterly profits due to pressure on margins. However, both companies managed to outperform market expectations. Overall, Phillips 66’s (NYSE:PSX) net income for the second quarter stood at USD1.7 billion, or USD3.72 per share, down from USD3.2 billion, or USD6.53 per share, during the same period last year.
We remind, Phillips 66 beat Wall Street's estimate for first-quarter profit due to elevated margins on sustained fuel demand amid tight crude supplies. The company's shares rose 1.3% to USD95.98 in morning trade. Profits from turning crude oil into gasoline, diesel and jet fuel surged as supplies remained tight due to pandemic-era closure of facilities and a recovery in demand.
Phillips 66 manufactures, transports and markets products that drive the global economy. The diversified energy company’s portfolio includes Midstream, Chemicals, Refining, and Marketing and Specialties businesses. Headquartered in Houston, Phillips 66 has employees around the globe who are committed to safely and reliably providing energy and improving lives while pursuing a lower-carbon future.