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LyondellBasell (LYB) Earnings Miss Estimates in Q3, Sales Beat

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·4 min read
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  • LYB
  • MEOH
  • NTR
  • STLD

LyondellBasell Industries N.V. LYB posted profits of $1,762 million or $5.25 per share in third-quarter 2021, up from $114 million or 33 cents in the year-ago quarter. Earnings per share missed the Zacks Consensus Estimate of $5.78.

Revenues climbed around 87% year over year to $12,700 million in the reported quarter. The figure beat the consensus mark of $11,996.5 million.

Consolidated EBITDA for the quarter increased nearly sixfold year over year to $2,691 million. Margins were driven by strong demand and tight market conditions. Strong demand supported sustained strength in benchmark integrated polyethylene margins in North America in the quarter.

However, margins for olefins and polyolefins in the Olefins & Polyolefins — Europe, Asia, International (EAI) segment were hit by higher naphtha and natural gas liquids feedstock prices in Europe. Higher costs also hurt margins across most businesses in the Intermediates and Derivatives unit.

LyondellBasell Industries N.V. Price, Consensus and EPS Surprise

LyondellBasell Industries N.V. Price, Consensus and EPS Surprise
LyondellBasell Industries N.V. Price, Consensus and EPS Surprise

LyondellBasell Industries N.V. price-consensus-eps-surprise-chart | LyondellBasell Industries N.V. Quote

Segment Review

In the Olefins & Polyolefins — Americas division, EBITDA increased more than threefold year over year to $1,568 million in the reported quarter. Olefins results were driven by higher margins as increased ethylene, propylene and other coproduct pricing more than offset higher feedstock costs. Higher polyolefins spreads and increasing product prices also more than offset higher monomer costs, boosting polyolefin results in the quarter.

The Olefins & Polyolefins — EAI segment witnessed a more than threefold year over year rise in EBITDA to $474 million. Combined Polyolefins results were higher as strong demand and tight markets drove higher polyethylene and polypropylene price spreads over monomer. Olefins results increased due to higher margins.

EBITDA in the Intermediates and Derivatives segment rose around 30% on a year-over-year basis to $348 million. Propylene Oxide & Derivatives results rose on strong demand and tight markets. Intermediate Chemicals results fell due to lower volumes associated with the downtime at the acetyls business. Oxyfuels & Related Products results went up in the quarter, driven by higher margins on higher demand and gasoline prices.

The Advanced Polymer Solutions segment posted EBITDA $121 million, down around 23% year over year. Compounding & Solutions results decreased due to lower volumes and margins. Advanced Polymers results improved on higher margins and higher volumes.

The Refining segment recorded a profit of $41 million in the reported quarter against a loss of $692 million in the year-ago quarter. Margin increased on the back of a rise in the Maya 2-1-1 industry benchmark crack spread. Increasing mobility led to improved demand and margins for transportation fuels produced by the segment.

The Technology segment’s EBITDA was $155 million in the reported quarter, up around 40% year over year. The upside was due to higher licensing revenues.

Financials

At the end of the quarter, LyondellBasell had cash and cash equivalents of $1,893 million, down around 23% year over year. Long-term debt was $12,945 million, down around 6% year over year.

In the third quarter, it generated $2.1 billion in cash from operations. The company also returned $0.5 billion to shareholders through dividend and share repurchase.

Outlook

The company expects demand for its products to remain strong moving ahead as global economic activities improve further driven by the rollout of vaccines. It also expects unmet customer demand will extend strength in automotive, construction and other durable goods markets over the next several quarters. The company expects margins to moderate due to rising feedstock prices, energy costs and winter seasonality. However, it expects to gain from strong markets and tight industry supply.

Price Performance

Shares of LyondellBasell have gained 33.4% in the past year compared with 26.2% rise of the industry.

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Zacks Rank & Key Picks

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

Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, Methanex Corporation MEOH and Steel Dynamics, Inc. STLD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien has an expected earnings growth rate of 180% for the current year. The stock has also rallied around 71% over a year.

Methanex has a projected earnings growth rate of 429% for the current year. The company’s shares have shot up around 49% in a year.

Steel Dynamics has a projected earnings growth rate of 477.5% for the current year. The company’s shares have surged around 107% in a year.


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