News wire —Phillips 66 reported a bigger-than-expected loss for the first quarter on Friday, hurt by lower refining margins amid widespread turnaround activities across the U.S. refining sector, sending its shares down over 2%.
U.S. refineries typically undergo seasonal maintenance and turnaround activities in preparation for the summer driving season, when fuel demand significantly increases. However, the scheduled downtime temporarily reduces refinery utilization, and the ability to capture revenue from margins.
“Our results reflect not only a challenging macro environment, but also the impact from one of our largest-ever spring turnaround programs,” said CEO Mark Lashier.
Phillips 66’s refining unit posted a net loss of $937 million for the first quarter, compared with a year-ago profit of $216 million.
Realized refining margins fell 38% to $6.81 per barrel during the quarter, with turnaround costs rising more than two-fold to $270 million. Crude capacity utilization stood at 80% compared with 92% last year.
With the bulk of the planned turnarounds complete and refining margins trending higher, second-quarter results “should rebound strongly from the depressed first-quarter level,” said Scotiabank analyst Paul Cheng.
Phillips 66’s results echo those of rival Valero Energy, which on Thursday reported a quarterly loss due to lower refining margins.
The results come amid a heated boardroom battle between Phillips and Elliott Investment Management, an activist investor that is pushing for changes in the refiner’s organization structure, operations and board.
The U.S. energy sector is also bracing for the impact of President Donald Trump’s tariffs and a rapidly intensifying trade war with China.
Phillips 66 said on Friday it is constructing a 300 million cubic feet per day gas plant in the Permian Basin, with operations expected to commence in 2027.
The company posted an adjusted loss of 90 cents per share for the first quarter, compared with analysts’ estimates of 72 cents apiece, according to data compiled by LSEG.
Reporting by Vallari Srivastava in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel – Reuters
