Marathon Petroleum Corp (NYSE:MPC) reported a steep decline in profitability on lower market crack spreads that have adversely impacted refining margins.
The oil refiner reported net income of $622 million, or $1.87 per share, for the third quarter of 2024, significantly down from earnings of $3.3 billion, or $8.28 per share, recorded in the same period last year.
Total revenue for the quarter reached $35.37 billion, a slight increase from $35.11 billion in Q3 2023.
Shares of Marathon gained around 3.7% on Tuesday following its earnings release.
However, Marathon’s results highlight the challenges facing the refining sector, which has seen profit margins fall to multi-year lows due to weak fuel demand and rising global fuel supplies.
CEO Maryann Mannen emphasized the company's commitment to "peer-leading operational excellence, commercial performance, and profitability per barrel" and said the "durability of its cash flow profile" supported a 12.5% increase to the quarterly distribution for shareholders.
In the refining and marketing segment, Marathon reported an operating income of $298 million, a sharp decrease from $3.8 billion year-over-year. The margin per barrel fell to $14.35 from $26.16, with throughput reaching 3 million barrels per day and an impressive 94% utilization rate. Operating costs also increased slightly to $5.30 per barrel compared to $5.14 per barrel in the prior year.
Conversely, the midstream segment demonstrated resilience with an operating income of $1.3 billion, up from $1.1 billion year-over-year. Adjusted EBITDA rose to $1.6 billion, up from $1.5 billion. Pipeline throughput stood at 6 million barrels per day, and natural gas processed averaged 9.8 billion cubic feet per day.
Despite the challenges in the refining sector, Marathon Petroleum has announced significant capital returns, including $3 billion in share buybacks and dividends, alongside a new $5 billion share repurchase authorization.
Marathon Petroleum's results come amid a broader trend within the U.S. refining industry, where major players, including Valero Energy and Phillips 66 (NYSE:PSX), are also reporting lower profits relative to last year.