Phillips 66 Delivers Profit above Expectations

SUBSCRIBE SEARCH ARTICLES NEWS Phillips 66 reported $5.62 billion in net profit for the third quarter, up from $3.85 billion for the prior three-month period on higher refining margins. Image by Lea Toews via iStock

Phillips 66 on Wednesday reported $5.62 billion in net profit for the third quarter (Q3), up from $3.85 billion for the prior three-month period on higher refining margins.

The Houston, Texas-based refining-focused company reported the same figure for Q3 adjusted net profit as special items had a negligible net impact. The Q3 bottom line represents a greater increase when compared to Q2's adjusted net income of $3.79 billion ($3.85 billion before adjustment).

Phillips 66's adjusted earnings per diluted share of $14.08 exceeded the Zacks Consensus Estimate, which averages projections by brokerage analysts, by 17.6 percent. Earlier it declared a quarterly dividend of $1.33 per share.

"This marks the second dividend increase in 2026 and brings the annualized dividend increase to 10.8 percent compared with the fourth quarter of 2025", chair and chief executive Mark Lashier said October 16. "The dividend increase underscores our confidence in the durability of the business model and the company's ability to generate sustainable cash flow".

Phillips 66's average refining margin increased by $13.92 per barrel quarter-on-quarter to $38 per barrel. Higher margins and refining volumes, supported by crude capacity utilization improving by two percentage points to 98 percent, resulted in refining adjusted EBITDA nearly doubling quarter-on-quarter to $6.28 billion.

The refining performance offset sequential declines in adjusted EBITDA in all other segments: midstream (to $977 million from $1.05 billion), chemicals (to $423 million from $528 million), marketing and specialties (to $320 million from $580 million) and renewable fuels (to $215 million from $568 million).

"Midstream pre-tax income decreased compared with the second quarter mainly due to lower margins associated with gas transportation", Phillips 66 said.

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"Chemicals pre-tax income decreased compared with the second quarter mainly due to lower polyethylene margins, partially offset by higher polyethylene volumes and lower costs".

It added, "Marketing and Specialties adjusted pre-tax income decreased compared with the second quarter mainly due to lower global marketing fuel margins, primarily driven by a rising price environment".

"Renewable Fuels pre-tax income decreased compared with the second quarter mainly due to lower margins, including inventory impacts, as well as higher costs", Phillips 66 explained.

Cash flow from operations excluding working capital increased quarter-on-quarter to $6.19 billion from $4.32 billion. Cash and cash equivalents stood at $5.85 billion at the end of Q3.

Net debt fell by $3.78 billion to $12.68 billion. Net debt-to-capital ratio stood at 26 percent, compared to 33 percent at the end of Q2.

Earlier this month Phillips 66 announced the retirement of Rich Harbison, executive vice president for refining, at the end of the year.

As part of ongoing succession planning, Chris Chandler will rejoin Phillips 66 as a strategic advisor to the CEO effective October 6, the company said. Chandler will become refining executive vice president from January 1, 2027.

"Chandler brings more than 30 years of experience in the energy industry, including more than two decades in leadership roles at Phillips 66", the company noted. "His previous Phillips 66 responsibilities included refinery site and operations leadership, midstream commercial and business development and corporate strategy.

"He most recently served as chief operating officer of Plains All American, with executive responsibility for operations, engineering, health, safety and environmental matters, and government affairs across the company's U.S. and Canadian entities".

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