LyondellBasell's (LYB) Q4 Earnings & Revenues Lag Estimates

LyondellBasell Industries N.V.’s (NYSE:LYB) posted net profits of $692 million or $1.79 per share in fourth-quarter 2018, down from $1,894 million or $4.79 in the year-ago quarter.

Barring one-time items (acquisition related costs), adjusted earnings came in at $1.83 per share, which missed the Zacks Consensus Estimate of $2.13.

LyondellBasell recorded revenues of $8,876 million, down roughly 2.8% year over year. The figure also trailed the consensus mark of $9,222 million.

Consolidated EBITDA declined around 29.8% year over year to $1,212 million.

Per the company, results in the quarter were affected by a decline in crude oil prices along with unusual operational events and challenges in the refining market.

2018 Highlights

In 2018, revenues jumped 13.1% year over year to $39,004 million. Net earnings came in at $4,690 million or $12.01 per share, down from $4,877 million or $12.23 in the prior-year quarter.

Segment Review

In the Olefins & Polyolefins — Americas division, EBITDA fell around 17.9% year over year to $631 million. Olefin results declined by roughly $55 million year over year due to a fall in ethylene prices. Polyolefins results dropped around $65 million, mainly due to declines in polyethylene volume and margin.

The Olefins & Polyolefins — Europe, Asia, International segment witnessed a decline in EBITDA of around 56.1% year over year to $127 million. Olefin results fell roughly $70 million on a year-over-year basis. Per the company, volume declined due to unplanned and planned maintenance at its cracker in Wesseling, Germany as well as low Rhine River levels. Consolidated polyolefins results declined around $90 million.
The Advanced Polymer Solutions (APS) segment saw a rise in EBITDA to $86 million from $82 million in the year-ago quarter. The addition of new product lines from the A. Schulman acquisition were partly offset by margin and volume declines in polypropylene compounds.

EBITDA in the Intermediates and Derivatives segment went down around 7.6% on a year-over-year basis to $379 million. Propylene Oxide & Derivatives results were affected by lower volumes stemming from planned maintenance.

EBITDA in the Refining segment declined $188 million year over year. The company’s Houston Refinery operated at 184,000 barrels per day during the quarter, down by 61,000 barrels per day from the prior-year quarter’s level. The downside was caused by planned maintenance during the fourth quarter.

The Technology segment’s EBITDA fell year over year to $61 million from $68 million, mainly due to decline in licensing revenues.

Financials

As of Dec 31, 2018, LyondellBasell had cash and liquid investments of $1.8 billion.

The company paid out dividend and repurchased 11.5 million shares during the quarter, totaling $1.4 billion in the fourth quarter and $3.4 billion in 2018.

Outlook

LyondellBasell witnessed normalization of markets with higher polymer demand and modest improvements in the discount for Maya crude oil during the first few weeks of 2019. The company expects growth to accelerate this year, courtesy of the planned startup of its Hyperzone polyethylene facility and construction of the new PO/TBA plant.

Per the company, global polyethylene capacity additions are likely to be moderate in 2019 and 2020. This is expected to provide support for high industry operating rates and ethylene chain profitability.

Price Performance

Shares of LyondellBasell lost around 20.2% in the past three months compared with the industry’s decline of 18.3%.

Zacks Rank & Key Picks

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

A few better-ranked stocks in the basic materials space include Ingevity Corporation (NYSE:NGVT) , Quaker Chemical Corporation (NYSE:KWR) and Israel Chemicals Ltd (NYSE:ICL) . While Ingevity and Israel Chemicals sport a Zacks Rank #1 (Strong Buy), Quaker Chemical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected earnings growth rate of 21.5% for 2019. The company’s shares have gained 29.5% in the past year.

Israel Chemicals has an expected earnings growth rate of 5.4% for 2019. Its shares have rallied 40.2% in a year’s time.

Quaker Chemical has an expected earnings growth rate of 21.1% for 2019. Its shares have surged 35.5% in a year’s time.

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