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LyondellBasell (LYB) Trumps Q1 Earnings, Revenues Miss

LyondellBasell Industries LYB topped earnings expectations in the first quarter of 2016. But its revenues fell by double digits year over year and missed expectations.

The Netherlands-based chemical giant’s profits from continuing operations slipped around 12% to $1,030 million or $2.37 per share in the reported quarter from $1,167 million or $2.42 per share registered a year ago.

Barring inventory adjustment charges, earnings from continuing operations were $2.48 per share for the quarter that comfortably beat the Zacks Consensus Estimate of $2.28.

LyondellBasell, in February, wrapped up the divestiture of its Argentina-based fully-owned unit Petroken Petroquimica Ensenada S.A. to Grupo Inversor Petroquimica S.L. (“GIP”) for $184 million. The company recorded an after tax gain of $78 million from the sale in the reported quarter.   

Revenues fell roughly 18% year over year to $6,743 million. That trailed the Zacks Consensus Estimate of $6,925 million.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) slipped around 7% year over year to $1,807 million in the quarter.
 

Segment Review

Revenues from the Olefins & Polyolefins – Americas division dropped 17% year over year to $2,115 million in the reported quarter. EBITDA fell around 15% year over year to $878 million as a result of inventory adjustments. Ethylene margins were lower by 14 cents a pound year over year. The company, however, recorded improved polyolefin results.

Sales from the Olefins & Polyolefins – Europe, Asia, International segment fell 11% year over year to $2,578 million. EBITDA jumped around 43% year over year to $509 million, supported by improved polyolefin results and gains on the sale of the Petroken unit.

Intermediates and Derivatives segment sales skid 11% to $1,702 million in the reported quarter. EBITDA decreased roughly 3% year over year to $326 million.

Revenues from the Refining segment tumbled roughly 41% to $955 million. EBITDA plunged around 91% year over year to $14 million. Renewable Identification Numbers (RINs) costs remained essentially flat year over year.

Technology segment sales fell around 3% to $132 million. EBITDA rose around 9% to $83 million.
 
Financials

LyondellBasell ended the quarter with cash and cash equivalents of $1,318 million, down roughly 18% year over year. Long-term debt rose around 11% year over year to $8,504 million.

LyondellBasell bought back 12.3 million ordinary shares during the reported quarter and paid dividends worth $336 million. Net cash provided by operating activities fell around 11% year over year to $1,300 million in the quarter. Capital expenditures for the quarter were $527 million.

Outlook

LyondellBasell said that a significant amount of industry capacity will be offline across the U.S. and Asia for scheduled maintenance in the balance of the second quarter, which will tighten global olefin and polyolefin markets. The company has started maintenance turnaround and its 800-million pound ethylene expansion at Corpus Christi with an expected ramp up to full utilization of the expanded capacity during the third quarter.

LyondellBasell also noted that its refinery will operate at reduced rates during the second quarter as it repairs damages from a fire in April. Its refining and oxyfuels businesses are benefiting from seasonal margin improvements.

Zacks Rank

LyondellBasell is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the chemicals space include Sinopec Shanghai Petrochemical Co. Ltd. SHI, Air Products and Chemicals, Inc. APD and The Dow Chemical Company DOW. While Sinopec Shanghai sports a Zacks Rank #1 (Strong Buy), both Air Products and Dow hold a Zacks Rank #2 (Buy).

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SHANGHAI PETROC (SHI): Free Stock Analysis Report
 
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