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LyondellBasell's (LYB) Q3 Earnings Top, Sales Lag Estimates

Zacks Equity Research
·4 min read

LyondellBasell Industries N.V. LYB posted profits of $114 million or 33 cents per share in third-quarter 2020, down from $965 million or $2.85 in the year-ago quarter.

Barring one-time items, adjusted earnings came in at $1.27 cents per share that topped the Zacks Consensus Estimate of $1.10.

Revenues fell 22.3% year over year to $6,776 million in the reported quarter. The figure also trailed the consensus mark of $6,909.3 million.

Consolidated EBITDA fell 69.2% year over year to $466 million.

The company witnessed improved demand for its products in the quarter on the back of higher global economic activities.

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 fell 24.4% year over year to $474 million. Polyolefin results dropped around $60 million due to lower margins.

The Olefins & Polyolefins — Europe, Asia, International segment witnessed a fall in EBITDA of 20% year over year to $148 million. Olefins results declined around $115 million due to lower margin stemming from lower ethylene prices. Combined polyolefins results were affected by lower polypropylene price spread over propylene.

The Advanced Polymer Solutions segment posted EBITDA $157 million, up from $102 million in the year-ago quarter. Compounding & Solutions results were essentially flat as higher margins were offset by lower volumes.  

EBITDA in the Intermediates and Derivatives segment fell 31.5% on a year-over-year basis to $267 million.  

The Refining segment came at a loss of $692 million in the reported quarter compared with a loss of $6 million in the year-ago quarter. Crude throughput fell 48,000 barrels per day due to lower demand for refined products.

The Technology segment’s EBITDA fell to $111 million in the reported quarter, up 33.7% year over year. The upside was driven by higher licensing revenues.

Financials

As of Sep 30, LyondellBasell had cash and liquid investments of $2.8 billion.

In the third quarter, the company paid out dividends worth $352 million. It also had 334 million common shares outstanding as of Sep 30.

Outlook

The company believes that the petrochemical industry should gain from recovery in global economies. For 2020, it expects global polyethylene demand to grow notwithstanding the pandemic and a recession. Also, China’s polyethylene trade deficit supports North American exports and tightens the U.S. domestic market. For the fourth quarter, LyondellBasell expects continued strength in North American integrated polyethylene margins.

The company also believes that a slow recovery in global mobility will exert pressure on demand for gasoline and jet fuel that will extend headwinds for its Refining and Oxyfuels & Related Products businesses. The company’s order books reflect higher demand from automotive manufacturing and other durable goods markets. This is likely to boost performance in the Advanced Polymer Solutions segment.

Price Performance

Shares of LyondellBasell have lost 19.5% in the past year compared with the industry’s 1.9% decline.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, Barrick Gold Corporation GOLD and B2Gold Corp BTG. While Barrick and Agnico Eagle sports a Zacks Rank #1 (Strong Buy), B2Gold carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 102.1% for 2020. Its shares have returned 31.4% in the past year.

Barrick has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 53.9% in the past year.

B2Gold has an expected earnings growth rate of 250% for 2020. The company’s shares have gained 83.1% in the past year.

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Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
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