Marathon Petroleum (MPC) Q2 2025 Earnings: Navigating Tighter Margins

Marathon Petroleum Corp. (MPC), a leading U.S. integrated downstream energy company, recently released its financial results for the second quarter of 2025. In this post, we'll dive into the numbers from its latest 10-Q filing to see how the company performed and what it signals about its path forward.

Overall, MPC reported a solid quarter operationally, but saw its net income decline compared to the same period last year, reflecting a more challenging market environment for refined products. Net income attributable to MPC for the second quarter of 2025 was $1.22 billion, down from $1.52 billion in the second quarter of 2024. Total revenues for the quarter also slipped to $34.1 billion from $38.4 billion a year prior.

To understand how revenues translate into profits, the following chart illustrates the flow of income and expenses for the quarter.

A Tale of Three Segments

MPC's performance is best understood by looking at its three distinct business segments: Refining & Marketing, Midstream, and Renewable Diesel.

Refining & Marketing: Navigating Tighter Margins

As the company's largest division, Refining & Marketing is the primary driver of its financial results. The segment's adjusted EBITDA—a measure of profitability before interest, taxes, depreciation, and amortization—dipped to $1.89 billion from $2.02 billion in the second quarter of 2024.

The key story here is the pressure on refining margins. While the amount of crude oil processed (net refinery throughput) remained steady at 3.06 million barrels per day, the profit generated from each barrel was squeezed. The company’s Refining & Marketing margin per barrel was nearly flat for the quarter at $17.58, but a look at the six-month figures shows a clearer decline. The filing points to a less favorable market for "crack spreads," which is the industry term for the price difference between a barrel of crude oil and the refined products (like gasoline and diesel) it produces. Higher energy costs also contributed to a $0.43 per barrel increase in operating costs.

Midstream: A Pillar of Stability

The Midstream segment, which is primarily composed of MPC's stake in MPLX LP, proved to be a source of stability. This division focuses on transporting, storing, and gathering crude oil and natural gas, often under long-term, fee-based contracts. This business model makes it less susceptible to commodity price swings.

Adjusted EBITDA for the Midstream segment edged up slightly to $1.64 billion for the quarter. This steady, predictable cash flow provides a valuable buffer against the volatility inherent in the refining business.

Renewable Diesel: Moving Toward Profitability

While still a smaller part of the business, the Renewable Diesel segment showed signs of progress. It reported a negative adjusted EBITDA of $19 million, but this marks a notable improvement from the $27 million loss in the same quarter last year. This positive trend was driven by higher sales volumes, signaling that the company's investments in this green energy space are beginning to gain traction, even if the segment is not yet profitable.

Strong Shareholder Returns Continue

Despite the dip in earnings, MPC remains committed to returning capital to its shareholders. During the second quarter, the company bought back 5 million of its own shares for $692 million. For the first half of 2025, total share repurchases amounted to $1.75 billion. Combined with a quarterly dividend of $0.91 per share, this signals strong confidence from management in the company's long-term financial health and cash-generating ability.

Looking Ahead

Marathon Petroleum's second-quarter performance paints a picture of a company skillfully navigating the cyclical nature of the energy industry. The core refining business faced headwinds from tighter market conditions, but the stable Midstream segment provided a solid financial foundation. Meanwhile, the improving results in Renewable Diesel highlight a potential future growth engine. With a continued focus on operational discipline and robust shareholder returns, MPC appears well-positioned to manage market fluctuations while investing in its future.