Sector News

LyondellBasell earnings plummet on weak demand, pricing

August 4, 2020
Energy & Chemical Value Chain

LyondellBasell reports second-quarter net income of $314 million, down 69% year over year (YOY) from $1.003 billion as the pandemic weighed on volume and pricing.

Revenue totaled $5.546 billion, down 39% YOY from $9.048 billion. Adjusted earnings per share dropped 74% YOY to 71 cents while beating the average analyst estimate of 65 cents as compiled by Refinitiv (New York, New York).

The quarter included an $88-million noncash inventory valuation benefit and $11 million in integration costs.

Demand is improving, says Bob Patel, CEO. “In June and July, we raised operating rates and prices in response to increased demand for North American polyethylene exports to Asia. With increased mobility and reductions in fuel inventories, we expect improving demand for our refining and oxyfuels & related products businesses. Similarly, our advanced polymer solutions segment is benefiting from rebounding demand for our plastics used in automotive manufacturing.”

Segment results

The olefins & polyolefins – Americas segment turned in adjusted EBITDA of $210 million, down from $635 million in the year-ago period. Olefins results declined about $235 million YOY as lower coproduct prices cut into ethylene margin, and lower demand cut into ethylene volume. Polyolefin results dropped $185 million YOY driven by lower margins, partially offset by a small increase in polyethylene (PE) volume. The polyethylene-ethylene spread dropped by about $280/metric ton, and the polypropylene-propylene spread by about $120/metric ton.

The olefins & polyolefins – Europe, Asia, International segment turned in adjusted EBITDA of $219 million, down from $331 million in the year-ago period. The olefins contribution declined about $90 million. Lower ethylene prices were partially offset by lower feedstock costs, while lower demand pulled down volume. Combined polyolefins results decreased about $25 million, mainly on lower margins, partially offset by increased PE volume.

The intermediates and derivatives segment reported adjusted EBITDA of $121 million, down from $448 million. The contribution from propylene oxide & derivatives dropped about $40 million on reduced demand and lower margins. Intermediate chemicals results dropped $130 million on lower margin, primarily in styrene, and lower volumes, owing to planned maintenance and reduced demand. The contribution from oxyfuels & related products decreased about $145 million as lower gasoline prices cut into margin. Demand declined, but the YOY difference was muted by the impacts of a third party terminal incident during the year-ago period.

The advanced polymer solutions segment turned in adjusted EBITDA of $23 million. Costs related to the integration of A. Schulan were relatively unchanged YOY. Compounding & solutions results decreased $85 million YOY on lower automotive demand. Advanced polymers results decreased approximately $10 million on reduced demand.

The refining segment reported adjusted EBITDA of a $14-million loss, compared to a $66-million loss in the year-ago period. Coke and sulfur co-product prices kept up with crude price and hedge gains, while the Maya 2-1-1 industry benchmark crack spread declined $5.73/barrel. Crude throughput decreased by 24,000 b/d owing to unplanned maintenance in the first weeks of April 2020 and second-quarter rate reductions tied to to low demand for refined products.

The technology segment turned in adjusted EBITDA of $112 million, up YOY from $107 million. Catalyst volumes and margins increased on customer inventory stocking early in the pandemic; licensing revenue declined.

By: Clay Boswell

Source: Chemical Week

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