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LyondellBasell's (LYB) Q2 Earnings and Sales Trail Estimates

Zacks Equity Research

LyondellBasell Industries N.V. LYB logged net profits of $1,003 million or $2.70 per share in second-quarter 2019, down from $1,654 million or $4.22 in the year-ago quarter.

Barring one-time items, adjusted earnings came in at $2.75 per share, missing the Zacks Consensus Estimate of $2.84.

LyondellBasell generated revenues of $9,048 million, down roughly 11.3% year over year. The figure also trailed the Zacks Consensus Estimate of $9,256.2 million.

Consolidated EBITDA declined around 21.4% year over year to $1,579 million.  

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 fell around 5.4% year over year to $635 million. Olefin results rose by more than $150 million year over year. Polyolefins results dropped around $190 million, mainly due to a spread decline in polyethylene over ethylene.

The Olefins & Polyolefins — Europe, Asia, International (EAI) segment reported a decline in EBITDA of around 6.8% year over year to $331 million. Olefin results rose more than $30 million on a year-over-year basis due to margin improvement as ethylene price declines were outpaced by declines in feedstock costs. Consolidated polyolefins results declined around $25 million.  

The Advanced Polymer Solutions (APS) segment’s EBITDA was $120 million in the second quarter compared with $121 million in second-quarter 2018.  

EBITDA in the Intermediates and Derivatives segment declined around 30.2% on a year-over-year basis to $448 million. Propylene Oxide & Derivatives results were affected by decline in volume. Also, lower volume and margin across most products impacted Intermediate Chemicals results.

EBITDA in the Refining segment amounted to a loss of $66 million against profit of $104 million in the year-ago quarter. Crude throughput was relatively unchanged at 261,000 barrels per day.

The Technology segment’s EBITDA fell 5.3% year over year to $107 million.

Financials

LyondellBasell had cash and liquid investments of $1.9 billion at the end of the quarter.

The company launched a tender offer, which resulted in the repurchase of 35.1 million shares in July.   

Outlook

In July, the company witnessed persistent demand for the majority of the products, with consumer-based demand driving stable volumes in the Olefins & Polyolefins segments.

In North America, the majority of the polyethylene plants and ethylene crackers that were planned to commence between 2016 and 2019 has been commissioned. Per the company, more than 70% of the polyethylene capacity is now operational.  

It anticipates low-cost natural gas liquid feedstocks to continue driving strong chain margin in the Olefins & Polyolefins Americas unit as well as Oxyfuels and Related Products business. Going forward, the company intends to start-up its Hyperzone HDPE plant during the second half of 2019.

Price Performance

Shares of LyondellBasell have lost 27.3% in the past year compared with the industry’s decline of 36.5%.



Zacks Rank & Other Key Picks

LyondellBasell currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are SSR Mining Inc. SSRM, Kinross Gold Corporation KGC and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 134.8% for 2019. The company’s shares have surged 58.1% in the past year.

Kinross has projected earnings growth rate of 100% for the current year. The company’s shares have gained 30.3% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 14.8% in the past year.

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