LyondellBasell Tops on Q4 Earnings & Revs

Zacks Equity Research

Chemicals and polymers maker LyondellBasell Industries (LYB) posted earnings from continuing operations of $2.11 per share for the fourth quarter of 2013, up from $1.13 per share recorded a year ago. The results topped the Zacks Consensus Estimate of $1.39.

Consolidated profit soared around 89% year over year to $1,175 million in the quarter. The company continued to leverage favorable North American natural gas environment. It saw higher profits across its businesses in the quarter.

LyondellBasell logged revenues of $11,138 million in the quarter, up roughly 0.4% year over year as gains across olefins and polyolefins business in Americas and intermediates and derivatives were mostly neutralized by a decline in the refining unit. It beat the Zacks Consensus Estimate of $10,705 million.

Consolidated earnings before interest, taxes, depreciation, and amortization (:EBITDA) climbed 22% year over year to $1,543 million.

For full-year 2013, earnings from continuing operations of $6.76 per share beat the Zacks Consensus Estimate of $6.09 and were ahead of the year-ago earnings of $4.96 per share.

Revenues for the year fell roughly 3% year over year to $44,062 million, but came ahead of the Zacks Consensus Estimate of $43,873 million.

The Netherlands-based company’s shares were up roughly 2.5% in pre-market trading, reflecting the beat.

Segment Highlights

Revenues from the Olefins & Polyolefins – Americas division rose 6% year over year to $3,279 million in the reported quarter. EBITDA rose 13% year over year to $883 million, helped by improved polyethylene performance on increased pricing, higher polypropylene sales volumes and increased ethane cracking at reduced costs.

Sales from the Olefins & Polyolefins - Europe, Asia, International segment fell around 0.5% year over year to $3,583 million. EBITDA jumped more than four-fold year over year to $115 million as higher volumes drove olefin results.

Intermediates and Derivatives segment sales rose 12% to $2,521 million in the reported quarter. EBITDA moved up 19% year over year to $354 million, supported by improved results in intermediate chemicals on higher margins and sales volumes for styrene, acetyls and ethylene glycol.

Revenues from the Refining segment fell around 10% to $2,976 million. EBITDA rose 9% year over year to $134 million as refinery margins increased on higher by-products spreads. Renewable Identification Numbers (RINs) costs to meet U.S. renewable fuel standards rose $4 million from the year-ago quarter.

Technology segment sales edged up 1% year over year to $142 million. EBITDA surged 31% year over year to $55 million as a result of the absence of charges associated with R&D restructuring activities.

Financials

LyondellBasell ended 2013 with cash and cash equivalents of $4.4 billion, up 63% year over year. Long-term debt increased 34% year over year to $5,776 million. LyondellBasell bought back 8.5 million shares in the reported quarter and 27.4 million shares in 2013. It paid dividends worth $1.1 billion and issued $1.5 billion in bonds last year.

Outlook

LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids advantage. The company expects olefins in North America to continue gain from strong margins created by cost-advantaged natural gas liquids.

LyondellBasell anticipates an improvement in olefins and polyolefins demand in Europe from a seasonally-low fourth-quarter 2013. The company also expects that its refining position will strengthen in 2014.

LyondellBasell restarted its methanol plant at Channelview, Tex., in fourth-quarter 2013 to benefit from low-cost natural gas from shale formations. The facility had been out of operation since 2004 as a result of rising natural gas costs.

The restart of the methanol facility represents the first in a number of U.S. Gulf Coast projects to leverage the natural gas price advantage. This project along with the company’s other major debottleneck projects (including expansion of ethylene capacity at La Porte) will bring in new capacity at considerably lower cost than building new facilities.

LyondellBasell, which has emerged from Chapter 11 bankruptcy in 2010, is among the leading plastics, chemical and refining companies globally with operations across 18 countries. The company’s products are used across a bevy of industries including electronics, automotive parts, packaging, construction materials and biofuels.

LyondellBasell currently retains a Zacks Rank #3 (Hold).

Some better-ranked chemical stocks include L'Air Liquide SA (AIQUY), Northern Technologies International Corp. (NTIC) and PPG Industries Inc. (PPG). While L'Air Liquide and Northern Technologies hold a Zacks Rank #1 (Strong Buy), PPG Industries retains a Zacks Rank #2 (Buy).

Read the Full Research Report on PPG
Read the Full Research Report on AIQUY
Read the Full Research Report on LYB
Read the Full Research Report on NTIC


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