Earnings take a big dip in 1Q 2019 for Phillips 66

Phillips 66 reported first quarter 2019 earnings of $204 million, a significant drop from the $2.2 billion reported in the fourth quarter of 2018.

The company reported its adjusted earnings were $187 million compared to the $2.3 billion reported in the fourth quarter 2018.

“Our first-quarter results reflect the benefit of our diversified portfolio despite a weak market environment,” said Greg Garland, chairman and CEO of Phillips 66. “In Chemicals, CPChem operated at 98% O&P utilization, and in Midstream, we had strong operating performance across our NGL value chain. We executed major turnaround activities at several refineries and were impacted by unplanned downtime.”

He said despite the slowdown, the company managed to return $708 million to shareholders through dividends and share repurchases in the quarter.

“We are dedicated to operating excellence and maintaining safe and reliable operations. We have a strong portfolio of growth projects and are focused on executing our capital program, ” added Garland. “Disciplined capital allocation is fundamental to our strategy, and we will invest in opportunities with attractive returns, while returning capital to shareholders through dividends and share buybacks.”

Midstream first-quarter 2019 pre-tax income was $316 million, compared with $379 million in the fourth quarter of 2018.

Transportation first-quarter 2019 adjusted pre-tax income of $203 million was $31 million lower than fourth-quarter 2018 adjusted pre-tax income of $234 million, mainly reflecting lower pipeline and terminal throughput volumes, driven by seasonal refinery turnaround activities, as well as lower equity affiliate earnings.

NGL and Other adjusted pre-tax income for the first quarter of 2019 was $90 million, a $32 million decrease from the fourth quarter of 2018, primarily due to fourth-quarter inventory impacts.

The Chemicals segment reflects Phillips 66’s equity investment in Chevron Phillips Chemical Company LLC (CPChem). Chemicals’ first-quarter 2019 pre-tax income was $227 million, compared with $152 million in the fourth quarter of 2018.

CPChem’s Olefins and Polyolefins (O&P) business contributed $219 million of adjusted pre-tax income in the first quarter of 2019, compared with $158 million in the fourth quarter of 2018.

CPChem’s Specialties, Aromatics and Styrenics (SA&S) business contributed $26 million of adjusted pre-tax income in the first quarter of 2019, an increase of $10 million from the prior quarter. The increase primarily reflects higher earnings from international equity affiliates due to improved volumes and margins.

Refining had a first-quarter 2019 pre-tax loss of $198 million, compared with pre-tax income of $2 billion in the fourth quarter of 2018.

Refining had an adjusted pre-tax loss of $219 million in the first quarter of 2019, compared with adjusted pre-tax income of $2 billion in the fourth quarter of 2018. The decrease was a result of a decline in realized margins, as well as lower volumes due to maintenance activity and unplanned downtime. Realized margins were down 56% to $7.23 per barrel in the first quarter, driven by narrowing of inland crude differentials, primarily Canadian crude, and lower clean product realizations.

Phillips 66’s worldwide crude utilization rate was 84%, down from 99% in the fourth quarter of 2018.

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