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LyondellBasell earnings plummet on weak demand, pricing

August 05/2020

MOSCOW (MRC) -- LyondellBasell (Houston, Texas) reports second-quarter net income of USD314 million, down 69% year-over-year (YOY) from USD1.003 billion as the pandemic weighed on volume and pricing, reported Chemweek.

Revenue totaled USD5.546 billion, down 39% YOY from USD9.048 billion. Adjusted earnings per share dropped 74% YOY to 71 cents while beating the average analyst estimate of 65 cents as compiled by Refinitiv (New York).

The quarter included an $88-million non-cash inventory valuation benefit and USD11 million in integration costs.

Demand is improving, says Bob Patel, CEO. In June and July, we raised operating rates and prices in response to increased demand for North American polyethylene exports to Asia. With increased mobility and reductions in fuel inventories, we expect improving demand for our refining and oxyfuels & related products businesses. Similarly, our advanced polymer solutions segment is benefiting from rebounding demand for our plastics used in automotive manufacturing."

The olefins & polyolefins Americas segment turned in adjusted EBITDA of USD210 million, down from $635 million in the year-ago period. Olefins results declined about USD235 million YOY as lower co-product prices cut into ethylene margin, and lower demand cut into ethylene volume. Polyolefin results dropped USD185 million YOY driven by lower margins, partially offset by a small increase in polyethylene (PE) volume. The polyethylene-ethylene spread dropped by about USD280/metric ton, and the polypropylene (PP)-propylene spread by about USD120/metric ton.

The olefins & polyolefins Europe, Asia, International segment turned in adjusted EBITDA of USD219 million, down from USD331 million in the year-ago period. The olefins contribution declined about USD90 million. Lower ethylene prices were partially offset by lower feedstock costs, while lower demand pulled down volume. Combined polyolefins results decreased about USD25 million, mainly on lower margins, partially offset by increased PE volume.

The intermediates and derivatives segment reported adjusted EBITDA of USD121 million, down from $448 million. The contribution from propylene oxide & derivatives dropped about $40 million on reduced demand and lower margins. Intermediate chemicals results dropped USD130 million on lower margin, primarily in styrene, and lower volumes, owing to planned maintenance and reduced demand. The contribution from oxyfuels & related products decreased about USD145 million as lower gasoline prices cut into margin. Demand declined, but the YOY difference was muted by the impacts of a third party terminal incident during the year-ago period.

The advanced polymer solutions segment turned in adjusted EBITDA of USD23 million. Costs related to the integration of A. Schulan were relatively unchanged YOY. Compounding & solutions results decreased $85 million YOY on lower automotive demand. Advanced polymers results decreased approximately USD10 million on reduced demand.

The refining segment reported adjusted EBITDA of a USD14 million loss, compared to a USD66 million loss in the year-ago period. Coke and sulfur co-product prices kept up with crude price and hedge gains, while the Maya 2-1-1 industry benchmark crack spread declined USD5.73/bbl. Crude throughput decreased by 24,000 b/d owing to unplanned maintenance in the first weeks of April 2020 and second-quarter rate reductions tied to to low demand for refined products.

The technology segment turned in adjusted EBITDA of USD112 million, up YOY from USD107 million. Catalyst volumes and margins increased on customer inventory stocking early in the pandemic; licensing revenue declined.

As MRC informed previiously, cash-strapped Sasol (Johannesburg) has received offers from companies including CP Chem, LyondellBasell, and Ineos for a large stake in Sasols Lake Charles, Louisiana, petrochemical complex. The companies are among those moving into a second round of bidding for a stake in the nearly completed complex, which could raise more than 29 billion South African rand (USD1.68 billion) for Sasol.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, Chevron Phillips, Ineos, LyondellBasell, Sasol, Russia, USA.
Category:General News
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