Sector News

LyondellBasell earnings rebound on strong polyolefins, intermediates

April 30, 2022
Chemical Value Chain

LyondellBasell (Houston, Texas) reports a first-quarter net income of $1.320 billion, up 23% year over year (YOY) from $1.070 billion and up 82% sequentially from $726 million. The rise was due to robust demand in all segments and “exceptionally strong” margins in intermediates and derivatives. Revenues totaled $13.157 billion, up 45% YOY and up 2.5% sequentially. Adjusted earnings per share came to $4.00, up 13% YOY and ahead of the analysts’ consensus estimate of $3.55 as compiled by S&P Global Market Insights.

“Our team reversed fourth-quarter trends and achieved price increases for polyethylene and polypropylene during the first quarter while rapidly rising feedstock and energy costs compressed olefins and polyolefins margins in the Americas,” says Ken Lane, LyondellBasell’s interim CEO. “European demand for polymers remained solid despite ongoing challenges from the war in Ukraine. Excluding planned maintenance, we operated our European ethylene crackers at 85% of capacity during the quarter.”

Sequential gains in demand and pricing for transportation fuels buoyed profitability in the oxyfuels and refining businesses, while the advanced polymer solutions segment benefited from improved automotive demand, he says.

Looking ahead, Lane anticipates favorable conditions into the summer, while noting uncertainty around supply chains and inflation.

“Outside of China, we anticipate benefits from continued demand for consumer packaging, improving volumes for automotive polymer compounds, seasonal demand for durable goods used in building and construction markets, as well as strong markets for our oxyfuels products,” he says. “In the second quarter, LyondellBasell’s margins are likely to improve as the prices for our products catch up with increased feedstock and energy costs. Additionally, we expect reductions in European and Asian industry operating rates, driven by maintenance downtime in Europe and unsustainable production economics in China, to tighten market supply over the coming months.”

Segment results
The olefins & polyolefins – Americas segment turned in EBITDA of $911 million, up 5% YOY and down 28% from the fourth quarter. Olefins margins declined sequentially on higher feedstock costs and lower coproduct prices, while lower product prices and higher monomer costs cut into polyolefins results.

The olefins & polyolefins – Europe, Asia, international segment turned in EBITDA of $188 million, down 54% YOY and up 21% from the fourth quarter, which included LIFO inventory valuation charges of $30 million. Olefin margins increased sequentially on higher monomer prices, partially offset by rising feedstock and energy costs. Steam cracker operating rates were depressed by feedstock supply disruptions resulting from the war in Ukraine, the company says. Polyolefin results benefited from higher spreads and volumes, which were partially offset by increased energy and monomer costs.

The intermediates & derivatives segment reported EBITDA of $546 million, up 200% YOY and up 117% from the fourth quarter, which included LIFO inventory valuation charges of $95 million. Propylene oxide and derivatives results benefited from sequentially higher butanediol margins and healthy durable goods demand. Intermediate chemicals results were boosted by sequential gains in styrene and acetyls margins driven by tight supply. Results for oxyfuels and related products increased more than $125 million sequentially on margin expansion driven by high gasoline prices and an improved butane-to-crude ratio, says the company.

The advanced polymer solutions segment turned in EBITDA of $125 million, down 7.4% YOY and up 421% from the fourth quarter, which included LIFO inventory valuation charges of $55 million. The sequential gain reflected strong pricing as well as higher volumes, particularly into automotive.

The refining segment reported EBITDA of $148 million, up from a $110 million loss in the year-ago quarter and down 1% from the fourth quarter. The technology segment reported EBITDA of $103 million, up 9.6% YOY and down 41% from the fourth quarter.

By Clay Boswell


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