FILE PHOTO: A Phillips 66 sign is seen at a gas station in the Chicago suburb of Wheeling, Illinois, U.S., October 27, 2016. REUTERS/Jim Young
October 29, 2021
By Arunima Kumar
(Reuters) – Phillips 66 posted a quarterly profit that trounced market expectations on Friday, as its refining margins jumped nearly five-fold on resurging demand for motor fuels following COVID-19 vaccinations and easing restrictions.
Gasoline and distillate consumption in the United States, the world’s largest fuel consumer, is back in line with five-year averages after more than a year of weak demand due to the pandemic that had also knocked refining capacity offline.
“We’re probably more optimistic today that we’re moving towards more of a mid-cycle earnings profile in our refining business,” Chief Executive Officer Greg Garland said on a call with analysts.
Phillips 66’s refining unit posted an adjusted pre-tax income of $184 million in the third quarter, compared with a loss of $970 million last year, while realized refining margins jumped 381.5% to $8.57 per barrel.
Recent storms also knocked some refining capacity offline, leading to tighter inventories.
Phillips 66 said it took a $1 billion impairment charge, primarily due to Hurricane Ida’s impact on its Alliance Refinery in Louisiana, which will remain shut for the rest of the year.
That is also expected to reduce refining crude utilization to a low 80%-range in the fourth quarter from 86% in the third, the company said.
Total processed inputs rose 12.5% to 168.74 million barrels per day from a year earlier but fell 1.3% from the three months prior.
Shares of Phillips 66 were down 2.5% at $74.79 amid a broader decline in the energy sector.
Net income stood at $402 million, or 91 cents per share, for the three months ended Sept. 30, compared with a loss of $799 million, or $1.82 per share, a year earlier.
Adjusted earnings of $1.4 billion, or $3.18 per share, beat a Refinitiv IBES estimate of $1.95 per share.
(Reporting by Arunima Kumar in Bengaluru; Editing by Ramakrishnan M.)
