By Sourasis Bose and Nicole Jao

(Reuters) -Oil refiner Phillips 66 reported a first-quarter earnings miss on Friday, as seasonal maintenance and a renewable fuels conversion project at its Rodeo, California, refinery weighed on profits.

Phillips’ market capture, a measure of refining profit compared with industry benchmarks, fell to 69% in the quarter from 93%, even as its crude capacity utilization was above last year at 92%.

The company said its realized margins slumped about 47% to $10.91 per barrel in the first quarter from a year earlier, led by nearly a 50% decline in Gulf Coast margins

Seasonal maintenance activities, primarily at its downstream catalytic units in the Gulf Coast, limited the refiner’s ability to make higher-value products, Mark Lashier, CEO of Phillips 66, said during the company’s earnings call on Friday.

“We’re still maximizing our crude utilization throughput, but that crude turned into intermediates instead of clean products by design because of the turnaround work we had underway,” he said.

Shares of the refiner were down nearly 3% on Friday.

On the West Coast, its renewables conversion project at its Rodeo refinery incurred a $180 million loss during the quarter, also weighing on its quarterly earnings.

The market had expected a noisy West Coast refining result given Rodeo startup, but margins were also weaker than forecast in other regions, TD Cowen analyst Jason Gabelman said in a note.

The Rodeo Renewable Energy Complex produces 30,000 barrels per day of renewable fuels. The facility is on track to produce approximately 50,000 barrels per day of renewable fuels by the end of the second quarter, according to its earnings report.

Activist investor Elliott, which revealed a $1 billion stake in Phillips last year, has been pushing the company to address underperformance in refining and speed up cost cuts.

Refiner margins have scaled back from the peaks achieved after Russia’s invasion of Ukraine in 2022, amid a rise in global refining capacity that has led to a drop in fuel prices.

Rival Valero topped profit estimates on Thursday despite routine maintenance work at its refineries.

Phillips 66 said it has launched a sales process of its retail marketing business in Germany and Austria as part of its plan to divest non-core assets of about $3 billion.

The Houston-based company reported adjusted earnings of $1.90 per share for the three months ended March 31, compared with analysts’ estimates of $2.17 per share, according to LSEG data.

(Reporting by Sourasis Bose in Bengaluru; Editing by Shounak Dasgupta, Shinjini Ganguli and Diane Craft)

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