Phillips 66 (NYSE:PSX)

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Area Asset Turnover: United States

Phillips 66; United States; area asset turnover calculation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Sales and other operating revenues	83,512)	86,401)	75,684)	59,742)	69,578)
Long-lived assets	36,407)	34,587)	33,264)	32,442)	29,624)
Area Activity Ratio
Area asset turnover¹	2.29	2.50	2.28	1.84	2.35

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ 2019 Calculation
Area asset turnover = Sales and other operating revenues ÷ Long-lived assets
= 83,512 ÷ 36,407 = 2.29

Between 2015 and 2019, the financial performance in the United States geographic area was characterized by fluctuating revenue streams and a consistent expansion of the long-lived asset base, resulting in varied levels of asset utilization efficiency.

Revenue Trends: Sales and other operating revenues exhibited significant volatility over the five-year period. A notable contraction occurred in 2016, with revenues falling from 69,578 million US$ to 59,742 million US$. This was followed by a period of strong growth, peaking at 86,401 million US$ in 2018, before experiencing a slight decline to 83,512 million US$ in 2019.
Long-lived Asset Expansion: In contrast to the volatility of revenues, long-lived assets demonstrated a steady and uninterrupted upward trend. Assets grew from 29,624 million US$ in 2015 to 36,407 million US$ by the end of 2019. This consistent increase indicates a sustained investment in the infrastructure and capital base of the U.S. operations.
Area Asset Turnover Efficiency: The area asset turnover ratio reflects the interplay between revenue fluctuations and asset growth. The ratio declined sharply from 2.35 in 2015 to a period low of 1.84 in 2016, driven by the simultaneous decrease in revenue and increase in assets. A recovery followed, with efficiency peaking at 2.50 in 2018, suggesting that revenue growth during that interval significantly outpaced capital expenditure. By 2019, the ratio moderated to 2.29 as revenue growth stalled while the asset base continued to expand.

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Area Asset Turnover: United Kingdom

Phillips 66; United Kingdom; area asset turnover calculation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Sales and other operating revenues	9,863)	11,054)	10,626)	9,895)	12,120)
Long-lived assets	1,256)	1,191)	1,254)	1,177)	1,459)
Area Activity Ratio
Area asset turnover¹	7.85	9.28	8.47	8.41	8.31

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ 2019 Calculation
Area asset turnover = Sales and other operating revenues ÷ Long-lived assets
= 9,863 ÷ 1,256 = 7.85

Revenue performance in the United Kingdom exhibited significant volatility between 2015 and 2019. A notable decline occurred between 2015 and 2016, where sales and other operating revenues dropped from 12,120 million USD to 9,895 million USD. A period of moderate recovery followed, with revenues increasing sequentially through 2018 to reach 11,054 million USD, before falling again in 2019 to 9,863 million USD.

Long-lived Asset Trends: The asset base underwent a contraction between 2015 and 2016, decreasing from 1,459 million USD to 1,177 million USD. Following this reduction, long-lived assets remained relatively stable, fluctuating within a narrow range between 1,191 million USD and 1,256 million USD through the end of 2019.
Area Asset Turnover Efficiency: Operational efficiency, as measured by the area asset turnover ratio, showed a consistent improvement from 2015 to 2018, rising from 8.31 to a peak of 9.28. This indicates an increased capacity to generate revenue per unit of long-lived asset during this interval. However, this efficiency trend reversed sharply in 2019, with the ratio falling to 7.85, the lowest point in the analyzed period. This decline was driven by a contraction in operating revenues occurring simultaneously with a slight increase in long-lived assets.

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Area Asset Turnover: Germany

Phillips 66; Germany; area asset turnover calculation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Sales and other operating revenues	4,053)	4,352)	6,692)	6,128)	6,584)
Long-lived assets	601)	570)	591)	503)	502)
Area Activity Ratio
Area asset turnover¹	6.74	7.64	11.32	12.18	13.12

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ 2019 Calculation
Area asset turnover = Sales and other operating revenues ÷ Long-lived assets
= 4,053 ÷ 601 = 6.74

A significant decline in asset utilization efficiency is observed in the German geographic area between 2015 and 2019. The period is characterized by a consistent downward trajectory in the area asset turnover ratio, driven primarily by a substantial reduction in operating revenues despite a relatively stable asset base.

Revenue Performance: Sales and other operating revenues experienced volatility in the early period, peaking at 6,692 million US dollars in 2017. However, a sharp contraction occurred between 2017 and 2018, with revenues falling to 4,352 million US dollars. This downward trend continued into 2019, ending at 4,053 million US dollars, which represents a total decrease of approximately 38% from the 2015 levels.
Long-Lived Asset Trends: The investment in long-lived assets remained comparatively stable throughout the five-year period. Assets grew from 502 million US dollars in 2015 to 601 million US dollars in 2019. The most notable increase occurred in 2017, where assets rose to 591 million US dollars and remained at that approximate level through 2019.
Area Asset Turnover Analysis: The area asset turnover ratio shows a steady and accelerating decline, falling from 13.12 in 2015 to 6.74 in 2019. The most critical drop occurred between 2017 and 2018, where the ratio fell from 11.32 to 7.64. This suggests that for every dollar of long-lived assets, the revenue generated decreased significantly, indicating a marked reduction in the operational efficiency of the assets deployed in the German market.

The divergence between increasing long-lived assets and decreasing revenues has led to a contraction of the asset turnover ratio by nearly 50% over the analyzed period. The data indicates that the asset base did not shrink in proportion to the declining revenue streams, resulting in lower productivity per unit of investment.

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Area Asset Turnover: Other foreign countries

Phillips 66; Other foreign countries; area asset turnover calculation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Sales and other operating revenues	9,865)	9,654)	9,352)	8,514)	10,693)
Long-lived assets	93)	91)	95)	87)	116)
Area Activity Ratio
Area asset turnover¹	106.08	106.09	98.44	97.86	92.18

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ 2019 Calculation
Area asset turnover = Sales and other operating revenues ÷ Long-lived assets
= 9,865 ÷ 93 = 106.08

Analysis of the operational efficiency in other foreign countries reveals a period of revenue volatility followed by a sustained improvement in asset productivity between 2015 and 2019.

Revenue Trends: Operating revenues experienced a significant contraction in 2016, decreasing from 10,693 million USD to 8,514 million USD. Following this decline, a consistent recovery trajectory was observed, with revenues increasing annually to reach 9,865 million USD by December 31, 2019.
Long-Lived Asset Management: The asset base in these regions remained relatively lean and stable. After an initial reduction from 116 million USD in 2015 to 87 million USD in 2016, long-lived assets fluctuated within a narrow range, ending the period at 93 million USD in 2019. The stabilization of the asset base during the revenue recovery phase contributed to enhanced efficiency ratios.
Area Asset Turnover Performance: The area asset turnover ratio exhibited a consistent upward trend throughout the analyzed period. Starting at 92.18 in 2015, the ratio climbed steadily to 106.08 by 2019. A notable increase in productivity occurred between 2017 and 2018, where the ratio rose from 98.44 to 106.09. This progression indicates an increasing capacity to generate higher sales volumes relative to the capital invested in long-lived assets within these foreign markets.

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Phillips 66, sales and other operating revenues by geographic area

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
United States	83,512)	86,401)	75,684)	59,742)	69,578)
United Kingdom	9,863)	11,054)	10,626)	9,895)	12,120)
Germany	4,053)	4,352)	6,692)	6,128)	6,584)
Other foreign countries	9,865)	9,654)	9,352)	8,514)	10,693)
Worldwide consolidated	107,293)	111,461)	102,354)	84,279)	98,975)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

The consolidated sales and other operating revenues exhibit a fluctuating trajectory between 2015 and 2019, characterized by a notable contraction in 2016 followed by a recovery period that peaked in 2018 before a slight decline in 2019.

Consolidated Revenue Performance: Worldwide revenues decreased from US$ 98,975 million in 2015 to US$ 84,279 million in 2016. A subsequent growth phase led to a five-year peak of US$ 111,461 million in 2018, followed by a moderation to US$ 107,293 million in 2019.
United States Market Influence: The United States serves as the primary revenue driver, consistently accounting for the largest share of total sales. Domestic revenues closely mirror the consolidated trend, dropping to US$ 59,742 million in 2016 and expanding to US$ 86,401 million in 2018. The high concentration of revenue in this region indicates that overall financial performance is heavily dependent on US market conditions.
European Regional Trends: Performance within European markets shows divergent patterns. The United Kingdom experienced a gradual decline in revenue, falling from US$ 12,120 million in 2015 to US$ 9,863 million in 2019. More significantly, Germany witnessed a sharp contraction beginning after 2017; revenues dropped from US$ 6,692 million in 2017 to US$ 4,053 million in 2019, marking a substantial reduction in regional contribution.
Other International Markets: Revenue from other foreign countries demonstrated resilience following a 2016 dip to US$ 8,514 million. This segment maintained a consistent upward trend from 2017 through 2019, ending the period at US$ 9,865 million, thereby offsetting some of the losses observed in the German market.

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Phillips 66, long-lived assets by geographic area

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
United States	36,407)	34,587)	33,264)	32,442)	29,624)
United Kingdom	1,256)	1,191)	1,254)	1,177)	1,459)
Germany	601)	570)	591)	503)	502)
Other foreign countries	93)	91)	95)	87)	116)
Worldwide consolidated	38,357)	36,439)	35,204)	34,209)	31,701)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

The distribution of long-lived assets across geographic regions indicates a consistent growth trajectory in total asset value from 2015 to 2019, characterized by a heavy concentration of capital investment within the domestic market.

United States Asset Expansion: A steady upward trend is observed in the United States, where long-lived assets increased from US$ 29,624 million in 2015 to US$ 36,407 million by 2019. This growth represents the primary driver of the total increase in the global asset base, reflecting a sustained expansion of domestic operational infrastructure.
European Market Performance: Assets in the United Kingdom exhibited volatility, declining from US$ 1,459 million in 2015 to US$ 1,177 million in 2016, before recovering to US$ 1,256 million by 2019. In contrast, Germany demonstrated a gradual increase in long-lived assets, rising from US$ 502 million in 2015 to US$ 601 million in 2019, indicating a modest growth in the German asset footprint.
Other Foreign Regions and Consolidated Totals: Long-lived assets in other foreign countries remained marginal and relatively stagnant, fluctuating between US$ 116 million in 2015 and US$ 93 million in 2019. On a worldwide consolidated basis, long-lived assets grew from US$ 31,701 million to US$ 38,357 million over the five-year period, a trend that closely aligns with the growth observed in the United States market.

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