LyondellBasell earnings surge YOY on polyolefin volumes and margins

MOSCOW (MRC) - LyondellBasell (Houston, Texas), one of the largest plastics, chemicals and refining companies in the world, reports fourth-quarter net income of USD855 million, up 40% year-over-year (YOY) from USD612 million on higher polyolefin volumes and margins, reported Chemweek.

A USD147 million non-cash, lower-of-cost-or-market (LCM) inventory valuation benefit increased net income by USD119 million, or USD0.36 per share. Sales totaled USD7.937 billion, down 3.0% YOY from USD8.179 billion. Adjusted earnings per share of USD2.19 increased 15% YOY from USD1.91 and beat the consensus of USD1.31 as compiled by Zacks Investment Research.

"During the fourth quarter, strong and persistent consumer-driven demand, industry supply constraints and continued recovery in durable goods markets reduced the impact of typical end-of-year slowdowns for our businesses,” says CEO Bob Patel. “During this period, we operated well and met robust demand for polyolefins used in consumer packaging and healthcare applications. Margins improved for olefins and polyolefins, propylene oxide & derivatives and intermediate chemicals businesses driven by higher demand and tight markets. Rebounding automotive manufacturing drove increased volumes for our advanced polymer solutions businesses. The refining and oxyfuels & related products businesses continued to face headwinds from low global mobility resulting in stagnant demand for transportation fuels."

Patel says improvement seen in late December have continued into the first quarter.

"Elevated export demand to China and Latin America, combined with tight markets, are supporting strong margins for our olefins and polyolefins businesses. Increased demand from automotive and construction markets has pushed the January order book for our advanced polymer solutions segment to higher levels than the fourth-quarter 2020 average. With wider deployment of coronavirus vaccines, we anticipate that increasing mobility and transportation fuel demand could provide significant upside for our oxyfuels and refining businesses during the latter half of this year."

The olefins & polyolefins (O&P) - Americas segment turned in EBITDA of USD722 million, up 45% YOY from $498 million. Revenue totaled USD2.21 billion, up 6.6% YOY. Olefins results increased USD65 million on higher ethylene volumes from increased demand, partially offset by lower margins. Polyolefin results increased USD140 million driven by increased demand. Margin improved due to an increase in the price of polyethylene and an increase in polyolefin volumes.

The O&P - Europe, Asia, International segment turned in EBITDA of USD304 million, up 591% YOY from USD44 million, on revenue of USD2.459 billion, up 14% YOY. Olefins results increased USD25 million driven primarily by increased margins and volumes. Margins were higher driven by lower feedstock prices partially offset by lower ethylene prices. Combined polyolefins results increased more than USD20 million on higher polyolefin volumes and polyethylene margin, partially offset by a lower polypropylene spread. Joint venture equity income increased USD65 million, driven by Bora.

The intermediates and derivatives segment turned in EBITDA of USD262 million, down 20% YOY from USD329 million, on revenue of USD1.804 billion, down 1.5% YOY. Results decreased approximately USD55 million YOY owing to LIFO inventory changes. Propylene oxide & derivatives results increased approximately USD40 million as margins and volumes increased on strong Asia demand and market tightness. Intermediate chemicals results increased about $50 million driven by improved volumes and higher margins, primarily in styrene. Volumes increased due to higher demand for most products. Oxyfuels & related products results decreased USD175 million as reduced gasoline prices and lower octane blend premiums cut into margins.

Advanced polymer solutions turned in EBITDA of USD152 million, up 181% YOY from USD54 million, on revenue of USD1.108 billion, up 3.8% YOY. Compounding & solutions results were relatively unchanged as higher volumes tied to automotive recovery were offset by lower margins. Advanced polymers results were flat.

Refining EBITDA came to a USD72 million loss, down from a gain of USD22 million in the year-ago period, on revenue of USD1.259 billion, down 39% YOY. Technology EBITDA totaled USD45 million, down 67% YOY, on revenue of USD167 million, down 18% YOY.

As MRC informed before, in late January, 2021, LyondellBasell and the China Petroleum & Chemical Corporation (Sinopec), one of the largest integrated energy companies in China, announced the signing of an agreement to form a 50:50 joint venture (JV) which will produce propylene oxide (PO) and styrene monomer (SM) in China's domestic market. First announced on December 23, 2019, the JV will operate under the name Ningbo ZRCC LyondellBasell New Material Company Limited.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. 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 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, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world's largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine's list of the "World's Most Admired Companies" for the third consecutive year.