Listen to this article 2 min
Houston-based Phillips 66 (NYSE: PSX) has begun the process to sell its retail marketing assets in Germany and Austria.
The company said during its first-quarter earnings call April 26 that it had contacted employees of the divestment, which is part of its plans to divest $3 billion worth of non-core assets.
Phillips 66 said its Austrian retail business and its Jet brand in Germany have about 1,000 sites across the two countries and make up 10% of the market share there.
“It’s a great business but doesn’t really integrate with the core strategic focus areas that we have as a company,” CFO Kevin Mitchell said during the earnings call.
He added that the sale does not include the company’s interest in the MiRO Refinery in Germany, which isn’t as integrated with the retail business there. Phillips 66 owns a 18.75% stake in the refinery, which is the largest refinery in Germany.
“The majority of buyers for those type of retail assets would not be interested in refinery ownership,” Mitchell said. "If there's a buyer that is interested, then that's a separate conversation and we'll handle that separately."
Mitchell said the assets’ contribution to earnings before interest, taxes, depreciation and amortization is about $350 million.
When asked by an analyst if there are any other European retail businesses that may be less strategic to hold onto, Mitchell mentioned the company owns a standalone Switzerland retail business, as well as a retail business in the United Kingdom that is very integrated with its refining operations there.
In its previous quarterly earnings report, Phillips 66 said it had earned $392 million from asset sales in 2023.
In an exclusive interview with the Houston Business Journal in February, CEO Mark Lashier said the company’s non-controlling interests may be more valuable to other companies and aren’t vital to Phillips 66’s control over its own value chains.
Although Phillips 66 had not commented publicly on which assets may be for sale, Lashier said certain assets that may be more strategic and valuable to other companies could be good targets for a sale.
Specifically, Lashier mentioned the company's midstream business as an example of a sector where it owns interests in a variety of different assets that Phillips 66 doesn’t control. The company is focused on building up its crude oil and natural gas liquids value chains from midstream to downstream.
Phillips 66 earned nearly $36.44 billion in revenue for the first quarter, up almost 4% from the same quarter last year, but net income plummeted almost 62% year over year to $748 million. Even when excluding special items, the company's adjusted earnings of $822 million was down 58% from a year earlier.
The company's adjusted earnings per share of $1.90 missed both the Zacks Consensus Estimate of $2.05 per share and the average analyst expectation of $2.17 per share posted by Yahoo Finance. Revenue beat the Zacks Consensus Estimate by 17.35% and significantly exceeded the average expectation of $33.08 billion, per Yahoo Finance.
Sign up here for the Houston Business Journal’s free morning and afternoon daily newsletters to receive the latest business news impacting greater Houston. For more business intelligence, follow us on LinkedIn, Facebook, X (formerly known as Twitter) and Instagram.
