LyondellBasell (LYB) Beats On Q3 Earnings And Revenues

LyondellBasell Industries (NYSE:LYB) beat earnings as well as revenue expectations in the third quarter of 2016.

The Netherlands-based chemical giant’s profits from continuing operations decreased around 19.7% to $955 million or $2.31 per share in the reported quarter from $1,189 million or $2.55 per share recorded a year ago. However, earnings per share beat the Zacks Consensus Estimate by a penny.

Revenues fell roughly 11.6% year over year to $7,365 million, but beat the Zacks Consensus Estimate of $7,295 million.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) declined around 19.7% year over year to $1,606 million in the quarter.

Segment Review

Revenues from the Olefins & Polyolefins – Americas division went down 6.9% year over year to $2,342 million in the reported quarter. EBITDA fell around 18.9% year over year to $682 million due to planned maintenance at Corpus Christiand Morris, IL. Polypropylene volumes were lower due to planned maintenance activity at the facility.

Sales from the Olefins & Polyolefins – Europe, Asia, International segment fell 10.2% year over year to $2,634 million. EBITDA jumped around 6.4% year over year to $584 million, supported by inventory adjustments, the restructuring of Asian polypropylene joint ventures and the sale of Australian polypropylene assets. Equity income from joint ventures in the segment decreased by $12 million, due to the scheduled joint venture maintenance.

Intermediates and Derivatives segment sales declined 11.5% to $1,805 million in the reported quarter. EBITDA decreased roughly 33.9% year over year to $304 million.

Revenues from the Refining segment tumbled roughly 21.4% to $1,330 million. EBITDA swung to a loss of $10 million from a profit of $93 million in the prior-year quarter. Operational disruptions reduced throughput by 40,000 barrels per day from the prior-year period.

The Technology segment’s sales rose 2% to $102 million on improved catalyst results, partially offset by licensing results. EBITDA remained flat year over year at $45 million.

Financials

LyondellBasell ended the quarter with cash and cash equivalents of $740 million, down 49.8% year over year. Long-term debt rose around 10.3% year over year to $8,464 million.

LyondellBasell bought back 10.3 million ordinary shares during the reported quarter and paid dividends worth $351 million. Net cash provided by operating activities fell around 24.7% year over year to $1,332 million. Capital expenditures for the quarter were $586 million.

Outlook

With the $2.31 per share earned in the third quarter, LyondellBasell remains on an annual pace to achieve earnings of over $9.00 per share in 2016. The company saw significant contribution from its European olefins and polyolefins business in the third quarter as well as the first nine months of 2016. This has particularly aided its overall performance as the North American olefins and polyolefins business results have been negatively impacted by a heavy planned maintenance schedule. Polyolefin demand remained strong in both regions.

In October too, the company witnessed favorable conditions for the global olefin and polyolefin industry. A slowdown in certain business lines is expected in the fourth quarter due to seasonal changes. The fourth quarter also marks the conclusion of the period of planned maintenance and associated downtime in the olefin and polyolefin assets. The company’s planned maintenance schedule for 2017 is significantly lighter than that of 2016. Moreover, it is expected to benefit from the past investment in system upgrades, reliability and expansions.

Zacks Rank

LyondellBasell is a Zacks Rank #2 (Buy) stock.

Some other well-ranked stocks in the chemical space include Koppers Holdings Inc. (NYSE:KOP) , BASF SE (OTC:BASFY) and E. I. du Pont de Nemours and Company (NYSE:DD) .

Koppers Holdings, sporting a Zacks Rank #1 (Strong Buy), has an expected long-term growth of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here.

BASF, also sporting a Zacks Rank #1, has a long-term expected growth rate of 5.57%.

DuPont, a Zacks Rank #2 stock, has a long-term expected growth rate of 7.88%.

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