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LyondellBasell reports record income from continuing operations

Published by
Hydrocarbon Engineering,


LyondellBasell Industries announced earnings from continuing operations of US$1.33 billion, or US$2.81 diluted earnings per share, for the second quarter of 2015. 2Q15 EBITDA was approximately US$2.19 billion.

The second quarter included a US$9 million non-cash, pre tax credit for the impact of a lower of cost or market (LCM) inventory adjustment (US$6 million after tax), which for certain segments represented a reversal of some or all of the LCM adjustment charged in the first quarter of 2015. Excluding the LCM adjustment, earnings from continuing operations during the first quarter totalled US$1.3 billion, or US$2.79 per share, and EBITDA was US$2.2 billion.

"Continued high operating reliability allowed us to take advantage of a favourable second quarter environment. We again delivered strong results across all segments, achieving record quarterly diluted earnings per share and EBITDA. Earnings per share during the last 12 months exceeded US$10 per share. Abundant natural gas and NGL supply coupled with strong pricing during the quarter continued to benefit our margins in the Olefins and Polyolefins and Intermediates and Derivatives segments. Planned and unplanned industry downtime created favourable global conditions, demonstrating that the industry is operating with a fundamentally tight supply and demand balance," said Bob Patel, LyondellBasell Chief Executive Officer.

Segment breakdown

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

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

For the three months ended 30 June 2015, EBITDA decreased by US$81 million compared to the first quarter of 2015, excluding a US$64 million quarter to quarter variance as a result of the LCM inventory adjustments. Olefins results decreased by approximately US$105 million primarily due to a higher cost of ethylene production from reduced coproduct contribution and increased heavy liquid raw material costs. Polyolefin results improved by approximately US$25 million principally due to higher sales volume. Joint venture equity income increased by US$1 million.

For the quarter ended 30 June 2015, EBITDA increased by US$15 million compared to the second quarter of 2014, excluding a US$21 million quarter to quarter variance as a result of the LCM inventory adjustment credit. Olefins results decreased by US$75 million primarily due to lower margins as a result of lower product prices. The price of ethylene decreased by approximately US$0.13/lb. This negative impact was partially offset by higher volume as 2014 results were impacted by the La Porte ethylene plant turnaround. Polyolefin results improved by approximately US$85 million due to volume that was higher by 8% and from higher polyethylene and polypropylene margins. The polypropylene spread over propylene improved by approximately US$0.05/lb. Joint venture equity income increased by US$2 million.

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

The primary products of this segment include ethylene and its coproducts (propylene and butadiene), polyethylene, polypropylene, polypropylene compounds (global), Catalloyprocess resins and polybutene-1 resins.

For the three months ended 30 June 2015, EBITDA increased by US$135 million compared to the first quarter of 2015. Olefins results increased by US$80 million primarily due to a higher ethylene price, which improved by approximately US$0.007/lb. Combined polyolefin results increased by approximately US$65 million. Tight supply in polyethylene and polypropylene drove higher spreads. Polyethylene volume decreased by approximately 11% and polypropylene volume decreased by approximately 16%. Combined polypropylene compounds and polybutene-1 results decreased by approximately US$15 million primarily as a result of higher polypropylene raw material costs. Equity income increased by US$22 million, as margins in several of the polyolefins joint ventures had similar improvement as the European businesses.

For the quarter ended 30 June 2015, EBITDA increased by US$173 million versus the second quarter of 2014. Olefin results increased by approximately US$70 million primarily due to higher ethylene margins. Combined polyolefin results increased by approximately US$105 million. Spreads in polyethylene and polypropylene increased by approximately US$0.06 and US$0.02/lb, respectively. Combined polypropylene compounds and polybutene-1 results decreased by approximately US$10 million as a result of higher polypropylene raw material costs. Equity income increased by US$16 million.

Intermediates and Derivatives (I&D)

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

For the three months ended 30 June 2015, EBITDA increased by US$102 million compared to the first quarter of 2015, excluding a US$27 million quarter to quarter variance as a result of the LCM inventory adjustments. Propylene oxide and derivative results decreased by approximately US$20 million primarily due to lower volumes. The first quarter benefitted from industry outages and seasonally strong aircraft deicer demand. Intermediate chemical results increased by US$55 million due to strength in styrene margins and higher methanol volume following first quarter maintenance at the Channelview plant. Oxyfuels results improved by approximately US$65 million due to higher seasonal margins and volume. Equity income decreased by US$2 million.

Compared to the three months ended 30 June 2014, EBITDA increased by US$53 million, excluding a US$17 million quarter to quarter variance as a result of the LCM inventory adjustment. Propylene oxide and derivative results were relatively unchanged. Intermediate chemical results improved by approximately US$45 million primarily from the strength in styrene margins. Oxyfuels results were relatively unchanged. Equity income increased by US$4 million.

Refining

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

EBITDA was unchanged compared to the first quarter of 2015, excluding a US$10 million quarter to quarter variance as a result of the LCM inventory adjustments. Crude oil throughput increased by 14 000 bpd. The Maya 2-1-1 industry benchmark spread increased by approximately US$0.25/bbl, averaging US$23.98/bbl. Secondary product price spreads offset some of this improvement as they decreased with higher crude oil prices. The cost of RIN's was lower by US$4 million.

Compared to the second quarter of 2014, EBITDA increased by US$17 million, excluding a US$5 million quarter to quarter variance as a result of the LCM inventory adjustment credit. Crude oil throughput decreased by 2000 bpd to 255 000 bpd. The Maya 2-1-1 spread decreased by approximately US$3.00/bbl. The corresponding Houston refinery spread was relatively unchanged. During the second quarter of 2015, secondary product margins improved due to the decline in crude oil. The cost of RIN's was relatively unchanged.

Technology

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

For the three months ended 30 June 2015, EBITDA decreased by US$19 million on lower catalyst volume and reduced licensing income compared to the quarter ended 31 March 2015.

Compared to the three months ended 30 June 2014, EBITDA decreased by US$14 million due to lower catalyst and licensing results.

Capital spending and cash balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology related expenditures, were US$278 million during the second quarter 2015. The cash and liquid investments balance was US$3.8 billion as of 30 June 2015. The company repurchased 7.9 million of its shares outstanding during the second quarter of 2015. There were 468 million common shares outstanding as of 30 June 2015. The company paid dividends of US$368 million during the second quarter of 2015.

Outlook

"The outlook for the third quarter remains positive for our portfolio. Natural gas and NGL remain well supplied and favourably priced. Significant global olefin and polyolefin supply shortages are starting to rebalance as supply returns to the market, but balances have remained favourable through July. Late in the third quarter, we will begin planned outages at two of our Intermediate and Derivatives production sites and at one European olefins plant," Patel concluded.


Adapted from press release by Rosalie Starling

Read the article online at: https://www.hydrocarbonengineering.com/refining/30072015/lyondellbasell-reports-record-income-from-continuing-operations-1190/


 

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