LyondellBasell (LYB) Tops Q2 Earnings Estimates, Sales Trail

LyondellBasell’s (NYSE:LYB) profits, as reported, rose around 3.6% year over year to $1,130 million or $2.81 per share in the second quarter of 2017. The company noted that the second-quarter results reflect the value of its investments in capacity expansions and asset maintenance.

Barring one-time items, earnings came in at $2.82 per share for the quarter, beating the Zacks Consensus Estimate of $2.71.

Revenues rose roughly 14.7% year over year to $8,403 million in the quarter, but missed the Zacks Consensus Estimate of $8,670.5 million.

Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) rose around 10.5% year over year to $1,970 million in the quarter.

Segment Review

Revenues from the Olefins & Polyolefins – Americas division went up 15.2% year over year to $2,547 million in the reported quarter. EBITDA, on a reported basis, rose around 13.9% year over year to $859 million. Combined polyolefin results decreased roughly $25 million year over year as lower polypropylene margins were partly offset by increased polypropylene sales volume.

Sales from the Olefins & Polyolefins – Europe, Asia, International segment rose around 10.5% year over year to $3,008 million. EBITDA rose around 21.3% year over year to $699 million. Olefin results declined around $15 million year over year resulting from lower polyethylene spreads.

Intermediates and Derivatives segment sales climbed 13.8% to $2,014 million in the reported quarter. EBITDA went down roughly14.6% year over year to $339 million.

Revenues from the Refining segment surged 32.9% to $1,713 million. EBITDA was $25 million against a loss of $13 million recorded in the prior-year quarter. Throughput rose by 82,000 barrels per day in the quarter. The company’s refinery unit was adversely impacted by unfavorable heavy to light differentials in crude oil markets.

The Technology segment’s sales fell roughly 17% to $107 million. EBITDA declined 34.2% year over year to $48 million.

Financials

LyondellBasell ended the quarter with cash and cash equivalents of $734 million, down roughly 30.7% year over year. Long-term debt rose to $8,496 million from $8,485 million a year ago.

LyondellBasell bought back 5.4 million shares during the quarter. Share buybacks and dividends totaled $0.8 billion in the reported quarter.

Outlook

LyondellBasell said that global olefin and polyolefin industry conditions remained favorable in July and over 25% the first wave of new U.S. ethylene capacity is now on stream. With no major maintenance schedule, the company expects to deliver robust performance from its global assets moving forward.

Price Performance

Shares of LyondellBasell have gained 2.1% in the last three months, underperforming the industry’s 4.1% gain.

Zacks Rank & Key Picks

LyondellBasell currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are The Sherwin-Williams Company (NYSE:SHW) , Ternium S.A. (NYSE:TX) and Hitachi Chemical Company, Ltd. HCHMY. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Sherwin-Williams has expected long-term earnings growth rate of 11.4%.

Ternium has expected long-term earnings growth rate of 18.4%.

Hitachi Chemical has expected long-term earnings growth rate of 5%.

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