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LyondellBasell Industries announces 2Q16 earnings

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Hydrocarbon Engineering,


LyondellBasell Industries has announced earnings from continuing operations for the second quarter of 2016 of US$1.1 billion, or US$2.56 per share. 2Q16 EBITDA was US$1.8 billion. The quarter included a US$68 million non-cash, pre-tax benefit for the impact of a lower of cost or market (LCM) inventory adjustment (US$47 million after-tax benefit). Excluding the LCM adjustment, earnings from continuing operations during the second quarter totalled US$1.0 billion, or US$2.45 per share, and EBITDA was US$1.7 billion.

"Excluding the first quarter gain from the Petroken business sale and the impact of maintenance activities, overall second quarter results were similar to the first quarter. Balance across our business portfolio enabled us to generate earnings in excess of US$1 billion and earnings per share of US$2.56. Industry trends generally developed as we anticipated resulting in continued strong polyolefin performance and seasonally stronger fuel margins. However, due to an April upset at our refinery, the benefits of higher fuel margins were only seen in our Oxyfuels business," said Bob Patel, LyondellBasell's CEO.

"During the third quarter, chemical and polyolefin markets thus far have generally been well balanced with trends similar to the second quarter. However, refining and oxyfuel margins have declined. Within our system, refinery repairs have been completed, and the Corpus Christi ethylene plant expansion is expected to be completed by the end of the third quarter. During the second half of the year our plant maintenance schedule continues to be significant with turnarounds at additional O&P and I&D facilities. Although our inventory and scheduling efforts will only partially mitigate the production impact during this heavy planned maintenance period, we look forward to the continuing returns from these investments in long term reliability," Patel said.

Olefins & Polyolefins - Americas (O&P-Americas)

The primary products of this segment include ethylene and its co-products (propylene, butadiene and benzene), polyethylene, polypropylene and Catalloy process resins.

Three months ended 30 June 2016 versus three months ended 31 March 2016

EBITDA decreased US$124 million for the second quarter of 2016 versus the first quarter of 2016. 1Q16 results included a US$57 million gain on the sale of the Petroken polypropylene business. Results declined by US$67 million exclusive of the Petroken gain. Compared to the prior period, underlying olefin results were relatively unchanged as margins increased while customer and internal derivative maintenance resulted in reduced ethylene volumes. Combined polyolefin results continued to be strong despite declining by approximatelyUS$60 million. Polyethylene sales volumes declined by 8% due to plant maintenance. Polyethylene spreads increased by approximately 1 cent per pound. Polypropylene spreads declined by approximately 2 cents per pound and volumes were down 5% primarily due to the first quarter sale of Petroken. Joint venture equity income declined by US$2 million.

Three months ended 30 June 2016 versus three months ended 30 June 2015

EBITDA decreased US$239 million versus the second quarter of 2015, excluding an unfavourable US$21 million quarter to quarter variance as a result of the LCM inventory adjustments. Olefin results drove the decline as quarterly EBITDA decreased approximately US$280 million versus the prior year primarily due to lower ethylene margin. Combined polyolefin results increased approximately US$30 million versus the prior year period. Polyethylene results declined due to maintenance while margins were relatively unchanged. Polypropylene benefitted from a spread improvement of approximately 10 cents per pound and volumes were lower in 2016 due to the first quarter Petroken sale. Joint venture equity income improved by US$12 million consistent with strong polypropylene margins.

Olefins & Polyolefins - Europe, Asia, International (O&P-EAI)

The primary products of this segment include ethylene and its co-products (propylene and butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy process resins and Polybutene-1 resins.

Three months ended 30 June 2016 versus three months ended 31 March 2016

EBITDA decreased by US$13 million versus the first quarter of 2016, excluding a favourable US$80 million quarter to quarter variance as a result of LCM inventory adjustments. 1Q16 results included a US$21 million gain on the sale of the Petroken polypropylene compounding business. Exclusive of the Petroken sale, results were relatively unchanged. Olefin results decreased approximately US$30 million on relatively unchanged volumes. Combined polyolefin results were steady. Polypropylene compounds and polybutene-1 results increased by approximately US$10 million. Equity income from joint ventures increased by US$27 million consistent with strong polypropylene margins.

Three months ended 30 June 2016 versus three months ended 30 June 2015

EBITDA increased by US$44 million versus the second quarter of 2015, excluding a favourable US$40 million quarter to quarter variance as a result of LCM inventory adjustments. Olefin results declined by approximately US$60 million due to a 2 cent per pound decrease in margin combined with reduced volumes related to planned maintenance at our Berre, France, facility. Combined polyolefin results increased approximately US$65 million as spreads for polyethylene improved by approximately 1 cent per pound while polypropylene spreads improved by approximately 4 cents per pound. Combined polyolefin volumes increased by approximately 4%. Polypropylene compounds and polybutene-1 results improved by approximately US$10 million. Equity income from joint ventures increased by US$17 million.

Intermediates & Derivatives (I&D)

The primary products of this segment include propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl alcohol (TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives (propylene glycol, propylene glycol ethers and butanediol); acetyls (including methanol), ethylene oxide and its derivatives, and oxyfuels.

Three months ended 30 June 2016 versus three months ended 31 March 2016

EBITDA increased US$15 million versus the first quarter of 2016, excluding a favourable US$56 million quarter to quarter variance as a result of LCM adjustments related to inventory. Results for PO and PO derivatives declined by approximately US$20 million partially due to product sales mix. Intermediate chemicals results improved by approximately US$10 million, primarily due to an approximately 4 cents per pound improvement in styrene margin. This increase was partially offset by lower methanol margins. Oxyfuels improved approximatelyUS$30 million consistent with seasonal margin improvements. Equity income from joint ventures was relatively unchanged.

Three months ended 30 June 2016 versus three months ended 30 June 2015

EBITDA decreased US$114 million versus the second quarter of 2015, excluding a favourable US$45 million quarter to quarter variance as a result of LCM inventory adjustments. Results for PO and PO derivatives were relatively unchanged. Intermediate chemicals results declined by approximately US$45 million primarily due to reduced methanol margins and lower EO/EG results partially offset by higher styrene sales volumes. Oxyfuels results decreased approximately US$55 million relative to a very strong second quarter 2015. Equity income from joint ventures decreased by US$2 million.

Refining

The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.

Three months ended 30 June 2016 versus three months ended 31 March 2016

EBITDA decreased US$27 million versus the first quarter of 2016. The Houston refinery operated at 183 000 bpd, primarily due to the refinery fire. The Maya 2-1-1 industry benchmark crack spread increased by US$3.21 per barrel, averaging US$21.07 per barrel. Despite the improved industry crack spreads, spreads at the Houston refinery did not improve due to operational limitations.

Three months ended 30 June 2016 versus three months ended 30 June 2015

EBITDA decreased US$167 million versus the second quarter of 2015, excluding an unfavourable US$5 million quarter to quarter variance as a result of LCM inventory adjustments. 2Q16 throughput was down by 72 000 BPD from the prior year period due to the refinery fire and subsequent downtime for repairs. The Maya 2-1-1 industry benchmark crack spread decreased by US$2.91 per barrel.

Technology Segment

The principal products of the Technology segment include polyolefin catalysts and production process technology licenses and related services.

Three months ended 30 June 2016 versus three months ended 31 March 2016

EBITDA decreased by US$10 million due to lower licensing revenue.

Three months ended 30 June 2016 versus three months ended 30 June 2015

EBITDA increased by US$16 million due to improved catalyst and licensing results.

Capital spending and cash balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were US$563 million during the second quarter of 2016. Cash and liquid investment balance was US$2.5 billion at 30 June 2016. The company repurchased 8.8 million ordinary shares during the second quarter of 2016. There were 419 million common shares outstanding as of 30 June 2016. The company paid dividends of US$362 million during the second quarter of 2016.


Adapted from press release by Rosalie Starling

Read the article online at: https://www.hydrocarbonengineering.com/refining/01082016/lyondellbasell-industries-announces-2q16-earnings-3822/


 

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