(Reuters) - Phillips 66 reported a $2.5 billion first quarter net loss on Friday, after taking $3 billion in writedowns in its refining and transportation businesses as demand for jet fuel and gasoline evaporated.
Demand for fuel has fallen by around 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, which last week warned of an inventory charge of up to $3.3 billion, in taking charges.
Shares in the Houston, Texas-based company were down 9.2% at $66.4 after it said losses in its refining segment were $2.3 billion in the three months ending March 31, primarily on a $1.8 billion goodwill impairment charge.
On an adjusted basis, Phillips 66 posted a loss of $401 million in its refining segment, compared with a $219 million loss a year earlier, as refining margins fell 1.7% to $7.11 per barrel in the quarter.
It also reported a $1.2 billion impairment charge on its investment in the DCP Midstream segment, which transports and sells natural gas and natural gas liquids in the U.S.
Overall, Phillips 66 posted a net loss of $2.5 billion for the first quarter, compared with a profit of $204 million a year earlier, as a result of the charges.
However, strong marketing margins and higher adjusted earnings at the company’s transportation and storage businesses helped offset the weak refining profits.
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.
U.S. refiners cut run rates in the first quarter as demand for refined products fell due to the coronavirus crisis.
Phillips 66 first quarter crude utilization was 83% compared with 97% in the prior quarter, while its April crude utilization rates fell to the high 60% range.
“We actually found ways to get down to lower utilization than we would have ever imagined,” executive vice president of refining Robert Herman said.
Reporting by Shradha Singh in Bengaluru and Laura Sanicola in New York; Editing by Shailesh Kuber, Krishna Chandra Eluri and Alexander Smith