Stock Analyst Note
Phillips 66 Earnings: Q2 Results Surpass Expectations Even as Refining Earnings Normalize
Phillips 66 reported second-quarter adjusted earnings of $984 million versus $1.8 billion a year ago, surpassing market expectations. A steep decline in refining earnings was largely the reason for the decline, as refining margins weakened during the quarter from the year before, falling toward midcycle levels. The midstream and chemicals segments registered earnings increases, while marketing-segment earnings fell from a year ago. Adjusted earnings for the refining segment fell to $302 million from $1.2 billion a year ago on a decrease in realized margins to $10.01 per barrel, from $15.55/bbl a year ago. Capture rates deteriorated to 64% during the quarter from 70% in the first quarter. We still expect performance to improve in the long term, as Phillips 66 has projects underway to improve capture by 5% by 2025.