Chevron Reports First Refining Loss in Four Years, Missing Earnings Estimates

2025-01-31 companies

San Ramon, Friday, 31 January 2025.
Chevron’s refining segment posted its first loss since 2020, contributing to lower-than-expected fourth-quarter earnings in 2024 due to weak margins and faltering fuel sales.

Financial Performance Overview

Chevron Corporation (NYSE: CVX) reported fourth-quarter earnings of $3.2 billion ($1.84 per share) [1][5], falling short of Wall Street’s expectations. The company’s adjusted earnings of $2.06 per share missed analysts’ estimates of $2.11 [1][6]. The earnings report included significant one-time charges, including $715 million in severance charges and $400 million in impairment charges [2], highlighting the challenging operating environment faced by the energy giant.

Refining Sector Struggles

The most notable aspect of Chevron’s quarterly performance was its downstream business posting a substantial loss of $248 million in the fourth quarter of 2024, a stark contrast to the $1.15 billion profit recorded in the same period last year [1]. The U.S. operations were particularly affected, with domestic fuel sales declining by 3% year-over-year [1]. This downturn was primarily attributed to weakening jet fuel demand and higher operating expenses [5].

Production Achievements and Shareholder Returns

Despite the refining sector’s challenges, Chevron maintained strong production levels, with worldwide net oil-equivalent production reaching 3.35 million barrels per day [1]. The company achieved record production levels in 2024, with worldwide and U.S. production increasing by 7% and 19% respectively [2]. In a move to maintain shareholder confidence, Chevron announced a 5% increase in its quarterly dividend to $1.71 per share [2] and returned a record $27 billion to shareholders throughout 2024 [2].

Looking Ahead

To address current challenges, Chevron has outlined plans for structural cost reductions targeting $2-3 billion in savings by the end of 2026 [7]. The company’s strategic focus remains on maintaining capital discipline and generating significant free cash flow [5]. However, the refining sector’s performance signals ongoing challenges in the energy market, particularly as post-pandemic demand patterns continue to evolve and economic activity in major oil-consuming nations remains uncertain [1].

Sources

Chevron energy sector