Refiner Phillips 66 swung to a quarterly loss on Friday on the back of $3 billion writedowns in its refining and transportation businesses amid a crash in demand for jet fuel and gasoline due to the ongoing COVID-19 pandemic, as reported by Reuters.
Fuel demand has plunged about 30% as countries around the world limit travel to stem the spread of the coronavirus.
Phillips 66 joined rivals Valero Energy, which took a $2 billion inventory writedown on Wednesday, and Marathon Petroleum Corp, that warned of an inventory charge of up to $3.3 billion last week, in taking charges.
The Houston, Texas-based company said losses in its refining segment ballooned to $2.3 billion, primarily on a $1.8 billion goodwill impairment charge.
On an adjusted basis, the company posted a loss of $401 million, compared with $219 million a year earlier, as refining margins fell 1.7% to $7.11 per barrel in the three months to March 31.
The company also took a $1.2 billion impairment charge in its equity investment in the DCP Midstream segment, which transports and sells natural gas and natural gas liquids in the U.S.
Shares of Phillips 66 were down 2.6% in premarket trade.
However, strong marketing margins and higher adjusted earnings at the company’s transportation and storage businesses helped offset the weak refining profits.
Overall, Phillips 66’s posted a net loss of $2.50 billion in the first quarter ended March 31, compared with a profit of $204 million a year earlier, due to the charges.
Excluding items, the company’s earnings rose to $450 million, or $1.02 per share, in the quarter, from $187 million, or 40 cents per share, a year earlier.
Reporting by Shradha Singh in Bengaluru; Editing by Shailesh Kuber and Krishna Chandra Eluri
