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LyondellBasell (LYB) Earnings Beat Estimates in Q1, Sales Lag

·4 min read

LyondellBasell Industries N.V. LYB posted profits of $1,070 million or $3.18 per share in first-quarter 2021, up from $144 million or 42 cents in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of $2.65.

Revenues increased 21.2% year over year to $9,082 million in the reported quarter. However, the figure missed the consensus mark of $9,328.5 million.

Consolidated EBITDA for the quarter more than doubled year over year to $1,585 million.

The company witnessed strong consumer-driven demand, industry-supply constraints and recovery in durable goods market. These supported price increases, driving margin improvements for many of its products.

LyondellBasell Industries N.V. Price, Consensus and EPS Surprise

LyondellBasell Industries N.V. Price, Consensus and EPS Surprise
LyondellBasell Industries N.V. Price, Consensus and EPS Surprise

LyondellBasell Industries N.V. price-consensus-eps-surprise-chart | LyondellBasell Industries N.V. Quote

Segment Review

In the Olefins & Polyolefins — Americas division, EBITDA increased 136.9% year over year to $867 million in the reported quarter. Olefins results were driven by increase in margins led by higher ethylene and propylene prices.

The Olefins & Polyolefins — Europe, Asia, International segment witnessed a rise in EBITDA of 117.9% year over year to $412 million. Combined Polyolefins results were higher due to increased polyethylene and polypropylene price spreads over monomer led by strong demand. Olefins results declined due to lower margins driven by increased feedstock costs.

The Advanced Polymer Solutions segment posted EBITDA $135 million, up from $113 million in the year-ago quarter. Advanced Polymer results remained the same but Compounding & Solutions results increased due to higher demand in Europe and Asia resulting in improved volumes and margins.

EBITDA in the Intermediates and Derivatives segment fell 10.3% on a year-over-year basis to $182 million. The downside was caused by lower volumes led by weather events and planned maintenance. This was partly offset by higher margins due to tight market supply.

The Refining segment recorded a loss of $110 million in the reported quarter against a loss of $272 million in the year-ago quarter. The downside was caused by margin decline and higher RINs cost.

The Technology segment’s EBITDA was $94 million in the reported quarter, up 67.9% year over year. The upside was due to higher licensing revenue milestones and increased catalyst results.

Financials

At the end of the quarter, LyondellBasell had cash and liquid investments of $1.8 billion.

In the first quarter, the company paid out dividends worth $352 million. It also had 334 million common shares outstanding as of Mar 31,2021.

Outlook

The company noted that it anticipates operating at nearly full capacity globally to meet strong demand that is expected to persist owing to low inventories and maintenance downtime across industry. Strong North American integrated polyethylene margins are expected to continue as U.S. producers look to fulfil domestic order backlogs, rebuild inventories and serve export demand.

In the second half of 2021, it is expected that increased mobility will drive higher demand for gasoline and jet fuel, improving margins for its Refining and Oxyfuels & Related Products businesses. Moderating feedstock costs is also expected to increase second quarter margins for the Advanced Polymer Solutions segment. The company looks forward to further debt reduction in the near future.

Price Performance

Shares of LyondellBasell have gained 94.9% in the past year compared with 73.2% rise of the industry.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Dow Inc. DOW, Nucor Corporation NUE and Impala Platinum Holdings Limited IMPUY.

Dow has a projected earnings growth rate of roughly 261.5% for the current year. The company’s shares have surged 88.8% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has an expected earnings growth rate of around 228.4% for the current year. The company’s shares have gained 101% in the past year. It currently sports a Zacks Rank #1.

Impala has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have skyrocketed 252.5% in the past year. It currently flaunts a Zacks Rank #1.

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