Phillips 66 2025 Q2 Earnings Misses Targets, Net Income Falls 11%

Phillips 66 reported its fiscal 2025 Q2 earnings on Jul 28th, 2025. The company fell short of expectations, with net income decreasing by 11% to $908 million and earnings per share down 10% to $2.15 compared to the same quarter last year. Despite these figures, Phillips 66 remains optimistic about future performance, projecting strong results for Q3 2025 due to high refinery utilization and favorable market conditions. The company is also focusing on capital expenditure in the Midstream segment and plans to return $1 billion to shareholders through dividends and share repurchases.

Revenue
Phillips 66's revenue declined 14.1% to $33.38 billion in Q2 2025 from $38.85 billion the previous year. Sales and other operating revenues contributed $33.32 billion, while equity in earnings of affiliates added $153 million. The company recorded a net loss on dispositions of $93 million, offset by other income totaling $139 million, resulting in total revenues and other income of $33.52 billion.

Earnings/Net Income
Phillips 66's EPS decreased by 10% to $2.15, down from $2.39 in the prior year. The net income also fell to $908 million, representing an 11% drop from $1.02 billion in the previous year. The decline in EPS reflects challenges faced by the company.

Post-Earnings Price Action Review
Investors following the strategy of purchasing Phillips 66 shares when earnings beat expectations and holding for 30 days have experienced a remarkable return of 99.69%, significantly surpassing the benchmark return of 88.74%. This strategy's excess return of 10.95% and impressive CAGR of 14.91% indicate substantial capital appreciation. Notably, the strategy demonstrated excellent risk management with a maximum drawdown of 0.00% and a Sharpe ratio of 0.42, showcasing its effectiveness in balancing returns and stability. Investors seeking both profitability and stability have found this approach to be a robust choice, benefiting from the company’s strategic execution and favorable market conditions.

CEO Commentary
Greg Garland, CEO of Phillips 66, expressed confidence in the company's financial recovery, highlighting the turnaround from a $368 million adjusted loss in Q1 to a $973 million profit in Q2 2025. Garland credited the Refining segment’s robust performance, with 98% crude capacity utilization, as a key driver. He emphasized the strategic focus on optimizing the asset base, including the planned cessation of operations at the Los Angeles Refinery to enhance efficiency and redirect resources to core growth areas.

Guidance
Phillips 66 anticipates continued strong performance in Q3 2025, driven by high refinery utilization and favorable market dynamics. The company plans capital expenditures focused on the Midstream segment to enhance stable, fee-based earnings. Additionally, Phillips 66 intends to return $1 billion to shareholders through dividends and share repurchases, reflecting confidence in ongoing cash flow generation.

Additional News
Phillips 66 has announced an agreement to sell a 65% stake in its Germany and Austria retail marketing business, valuing the enterprise at approximately €2.5 billion ($2.8 billion). The transaction is expected to close in the second half of 2025, subject to regulatory approvals, and will support debt reduction and shareholder returns. The company's board declared a quarterly dividend of $1.20 per share, payable on September 2, 2025, to shareholders of record on August 19, 2025. Additionally, Phillips 66 released its 2025 Sustainability and People Report, highlighting a 15% reduction in Scope 1 and 2 GHG emissions intensity and a 38% reduction in serious incident injuries in 2024.