(Reuters) Phillips 66 reported a bigger-than-expected loss for the first quarter on Friday, hurt by lower refining margins amid widespread maintenance and turnaround activities across the U.S. refining sector.
U.S. refineries typically undergo seasonal maintenance and turnaround activities in preparation for the summer driving season, when fuel demand significantly increases.
However, this scheduled downtime temporarily reduces refinery utilization and the ability to capture revenue from margins, often impacting quarterly performance.
Shares of the company fell nearly 2% before the bell.
“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.
“With the bulk of our turnarounds behind us, we are well-positioned to capture stronger margins as the year unfolds.”
The company’s refining unit posted a net loss of $937 million for the first quarter, compared with a year-ago profit of $216 million.
Phillips 66 said its realized refining margins fell 38% to $6.81 per barrel during the January-March quarter, with turnaround costs rising more than twofold to $270 million.
Its crude capacity utilization stood at 80% compared with 92% last year.
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 organizational structure, operations and board.
The U.S. energy sector is also preparing for a potential fallout from President Donald Trump’s sweeping tariffs and the rapidly intensifying trade war with China — factors that could weigh on demand for refined products like gasoline, diesel, and jet fuel.
Houston, Texas-based Phillips 66 posted an adjusted loss of 90 cents per share for the three months ended March 31, compared with analysts’ average loss estimate of 72 cents per share, according to data compiled by LSEG.
