LyondellBasell's (LYB) Earnings & Sales Lag Estimates In Q4

LyondellBasell Industries N.V. (NYSE:LYB) posted profits of $612 million or $1.83 per share in fourth-quarter 2019 compared with $692 million or $1.79 in the year-ago quarter.

Barring one-time items, adjusted earnings came in at $1.91 per share that missed the Zacks Consensus Estimate of $2.26.

Revenues fell 7.9% year over year to $8,179 million in the reported quarter. The figure also trailed the consensus mark of $8,427.1 million.

Consolidated EBITDA fell 3.3% year over year to $1,172 million.

In the fourth quarter, results in most of the segments were affected by a slowdown in industrial demand as well as normal seasonality.

2019 Highlights

In 2019, total revenues fell 11% year over year to $34,727 million. Net earnings came in at $3,397 million or $9.58 per share for the year, down from $4,690 million or $12.01 in 2018.

Segment Review

In the Olefins & Polyolefins — Americas division, EBITDA fell 21.1% year over year to $498 million. Olefin results increased more than $60 million year over year. The company stated that ethylene margin expanded as lower feedstock costs were partly offset by a lower propylene price. Polyolefin results dropped around $235 million mainly due to spread decline in polypropylene and polyethylene.

The Olefins & Polyolefins — Europe, Asia, International segment witnessed a rise in EBITDA of 13.4% year over year to $144 million. Olefin remained flat on a year-over-year basis. Per the company, volumes were boosted by improved reliability with unplanned and planned maintenance affecting fourth-quarter 2018 results. This was offset by a decline in margin.

The Advanced Polymer Solutions (APS) segment saw a decline in EBITDA to $54 million from $86 million in the year-ago quarter. Volumes were affected by softness in automotive market. Advanced Polymers margins declined by $10 million due to lower volumes.

EBITDA in the Intermediates and Derivatives segment went down 13.2% on a year-over-year basis to $329 million. Propylene Oxide & Derivatives results were affected by sales mix, which were partly offset by higher volumes. Volumes rose due to scheduled maintenance in fourth-quarter 2018.

EBITDA in the Refining segment were $22 million in the reported quarter against a loss of $84 million in the year-ago quarter. The company stated that Maya 2-1-1 crack spread rose considerably year over year in the fourth quarter to $19.44 per barrel. However, margin improvements from the Maya 2-1-1 crack spread was partly offset by higher prices of heavy sour crude oil bought in the U.S. Gulf Coast market. Also, the Houston Refinery operated at 267,000 barrels per day, up 45.1% year over year, due to the completion of planned maintenance in second-half 2018.

The Technology segment’s EBITDA rose to $138 million in the reported quarter from $68 million a year ago, mainly due to higher licensing revenues.

Financials

As of Dec 31, 2019, LyondellBasell had cash and liquid investments of $1.1 billion.

In 2019, the company paid out dividends worth $1.5 billion. It also repurchased 42.7 million ordinary shares during the year. The company had 333 million common shares outstanding as of Dec 31, 2019.

Outlook

LyondellBasell expects to witness normal seasonal improvements in its businesses gradually through the second and the third quarter of 2020. The company believes that a rebound in industrial demand as well as favorable resolution of trade policies will provide substantial upside for the industry. It believes that the foundations of cost management, operational excellence and disciplined capital allocation will continue to serve amid the current challenging environment.

Considering the completion of its new Hyperzone project and the expected benefits from the IMO 2020 regulations, the company expects to extend its impressive track record of generating cash.

Price Performance

Shares of LyondellBasell have lost 4.1% in the past year compared with the industry’s 25.7% decline.

Zacks Rank & Key Picks

LyondellBasell currently carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the basic materials space are Daqo New Energy Corp (NYSE:DQ) , Royal Gold, Inc (NASDAQ:RGLD) and Sibanye Gold Limited (NYSE:SBGL) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 30.5% in the past year.

Royal Gold has an estimated earnings growth rate of 83.5% for fiscal 2020. Its shares have returned 30.3% in the past year.

Sibanye Gold has an expected earnings growth rate of 587.5% for 2020. The company’s shares have surged 208.1% in the past year.

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