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LyondellBasell (LYB) Q3 Earnings Lag, Sales Top Estimates

LyondellBasell’s LYB net profits, as reported, rose around 10.8% year over year to $1,058 million or $2.67 per share in the third quarter of 2017. Barring an after-tax gain of $103 million or 26 cents from the sale of the company’s interest in the Geosel pipeline and storage system in France, adjusted earnings came in at $2.41 per share for the quarter, missing the Zacks Consensus Estimate of $2.43.
 
Revenues rose roughly 15.6% year over year to $8,516 million in the quarter, beating the Zacks Consensus Estimate of $8,090 million.
 
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose around 13.4% year over year to $1,821 million in the quarter.

LyondellBasell Industries NV Price, Consensus and EPS Surprise
 
Revenues from the Olefins & Polyolefins — Americas division went up 4.6% year over year to $2,449 million in the reported quarter. EBITDA, on a reported basis, fell around 9.7% year over year to $616 million. Olefin results decreased roughly $130 million year over year due to decrease in ethylene margin from reduced ethylene price and higher feedstock costs.
 
Sales from the Olefins & Polyolefins — Europe, Asia, International segment rose around 19.7% year over year to $3,152 million. EBITDA rose around 19.5% year over year to $698 million. Olefin results declined around $15 million year over year resulting from higher feedstock prices that led to declining ethylene margins.
 
Intermediates and Derivatives segment sales climbed 15.1% to $2,077 million in the reported quarter. EBITDA went up roughly 32.2% year over year to $402 million.
 
Revenues from the Refining segment increased 25.6% to $1,670 million. EBITDA was $58 million as against a loss of $10 million recorded in the prior-year quarter. Throughput rose by 31,000 barrels per day in the quarter as operational disruptions in the year ago quarter exceeded reduced rates in the reported quarter due to Hurricane Harvey. 
 
The Technology segment’s sales fell roughly 3.9% to $98 million. EBITDA rose 4.4% year over year to $47 million.
 
Financials
 
LyondellBasell ended the quarter with cash and cash equivalents of $1,204 million, up 62.7% year over year. Long-term debt rose to $8,531 million from $8,464 million a year ago.
 
LyondellBasell repurchased 3.1 million shares in the third quarter with 394 million shares remaining outstanding at the end of the quarter. The company paid dividend of $356 million in the reported quarter.
 
Outlook
 
LyondellBasell noted that Hurricane Harvey led to reduced inventories across the petrochemical industry. This has resulted in further delays in the startup of new U.S. ethylene and derivative capacity. The company expects global markets to remain tight to balanced for the rest of 2017 as the industry works to rebuild inventories during the fourth quarter.
 
Price Performance
 
Shares of LyondellBasell have moved up 19.4% in the past six months outperforming the industry’s 16.5% gain.
 
 
 
Zacks Rank & Other Stocks to Consider
 
LyondellBasell currently carries a Zacks Rank #2 (Buy).
 
Some other top-ranked companies in the chemical space are FMC Corporation FMC, Huntsman Corporation HUN and Koppers Holdings Inc. KOP. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
 
FMC Corp. has an expected long-term earnings growth rate of 11.3%.
 
Huntsman has an expected long-term earnings growth rate of 7%.
 
Koppers Holdings has an expected long-term earnings growth rate of 18%.
 
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