LyondellBasell (LYB) Announces Sale of EO&D Business to INEOS
LyondellBasell Industries N.V. LYB stated that it has reached a deal with INEOS Oxide ("INEOS") to sell its Ethylene Oxide & Derivatives ("EO&D") business and the manufacturing plant situated in Bayport, TX. This transaction demonstrates the company's disciplined emphasis on value creation through the implementation of a key strategy pillar — growing and upgrading LyondellBasell's core — the company noted.
The successful implementation of this strategic pillar necessitates difficult decisions to exit operations that are not vital to the organization. The company is proud of the EO&D business's positive cash generation, access to advantageous feedstocks, dependability and highly skilled personnel. It is pleased to have struck an agreement with INEOS to allow the business to continue generating value under other ownership.
The EO&D business in Bayport manufactures high-quality ethylene oxide and other derivatives. The fully integrated platform, which provides access to cost-effective feedstocks and logistics networks, has good market performance and reputation.
The transaction purchase price is $700 million. The deal is projected to conclude in the second quarter of 2024, following the completion of planned facility maintenance, and is subject to regulatory and other normal closing conditions.
Shares of LyondellBasell have gained 11.6% over the past year against a 14% decline of its industry.
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The company, on its third-quarter call, said that it anticipates seasonally lower demand across most industries in the fourth quarter. Higher feedstock costs, new industry capacity and slowing Chinese demand growth continue to put pressure on global olefins and polyolefins margins. Following the end of the summer driving season, oxyfuels and refining margins are projected to fall.
Nonetheless, oxyfuel margins are expected to remain significantly higher than historical averages. LyondellBasell plans to operate its assets in line with market demand during the fourth quarter, with average operating rates of 85% for North American olefins and polyolefins (O&P) assets, 75% for European O&P assets and 70% for Intermediates & Derivatives assets.
LyondellBasell Industries N.V. Price and Consensus
LyondellBasell Industries N.V. price-consensus-chart | LyondellBasell Industries N.V. Quote
Zacks Rank & Key Picks
LyondellBasell currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Denison Mines Corp. DNN, Axalta Coating Systems Ltd. AXTA and The Andersons Inc. ANDE.
Denison Mines has a projected earnings growth rate of 100% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 58.1% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axalta has a projected earnings growth rate of 5.4% for the current year. It currently carries a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of roughly 6.7%, on average. The stock is up around 26.8% in a year.
Andersons currently carries a Zacks Rank #2 (Buy). The stock has gained roughly 49.7% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.
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