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LyondellBasell (LYB) Q2 Earnings Beat Estimates, Sales Lag
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LyondellBasell Industries N.V. (LYB - Free Report) recorded second-quarter 2023 profit of $715 million or $2.18 per share, reflecting a fall of 56.2% from the year-ago quarter's profit of $1,644 million or $4.98 per share.
LYB posted adjusted earnings of $2.44 per share, down 53% from the year-ago quarter figure of $5.19. However, adjusted earnings surpassed the Zacks Consensus Estimate of $2.29.
The company’s net sales in the second quarter were $10,306 million, which lagged the Zacks Consensus Estimate of $10,396.5 million. Net sales decreased around 30.5% from $14,838 million in the prior-year quarter.
During the second quarter, global olefins and polyolefins margins experienced an improvement, primarily due to lower feedstock costs in the United States and Europe. The commencement of LyondellBasell's propylene oxide and oxyfuels plant in Texas contributed to new capacity but this was offset by planned maintenance at the company's existing assets. Oxyfuels margins remained strong during this period, supported by low butane costs and a strong demand for fuels. However, refining margins declined from the highs seen in the first quarter of 2023, though they remained above long-term averages.
LyondellBasell Industries N.V. Price, Consensus and EPS Surprise
In the reported quarter, the Olefins & Polyolefins — Americas division experienced a year-over-year decrease in EBITDA of approximately 28.8% to $679 million. The decline was attributed to lower margins. The segment's revenues amounted to $2,727 million, slightly below our estimate of $2,845 million.
Similarly, Olefins & Polyolefins — Europe, Asia, the international segment witnessed a decline in EBITDA to $84 million from $186 million in the prior-year quarter. Lower margins in the Polyolefins business, caused by weak demand, resulted in this decrease. The segment's revenues reached $2,729 million, above our estimate of $2,451.6 million.
In the Intermediates and Derivatives segment, EBITDA decreased approximately 30% year over year, amounting to $472 million. This decline was due to weaker propylene oxide and derivatives results due to lower demand. Sales were $2,662 million, higher than our estimate of $2,513.4 million.
The Advanced Polymer Solutions segment's EBITDA was $34 million, down from $42 million in the prior-year quarter, primarily due to lower Compounding & Solutions volumes resulting from weak demand. The segment's revenues were $960 million, above our estimate of $883.6 million.
In the Refining segment, EBITDA declined around 88.8% from the year-ago quarter to $47 million. Sales for the unit were $2,459 million, surpassing our estimate of $2,254.6 million.
The Technology segment's EBITDA for the reported quarter was $79 million, down approximately 29.5% year over year. The decrease was attributed to lower catalyst volumes caused by low demand. The segment's revenues were $154 million, higher than our estimate of $143.4 million.
Financials
LyondellBasell generated $1,290 million in cash from operating activities during the quarter. The company returned $508 million as dividends and share repurchases during the quarter.
Outlook
In the third quarter, LyondellBasell expects soft demand due to ongoing economic uncertainty to offset the usual benefits from summer seasonality. Challenging petrochemical margins are being influenced by stagnant demand, volatile feedstock costs and increased capacity in North America and China. However, the company anticipates attractive oxyfuels and refining margins, supported by summer demand for transportation fuels. During this period, LyondellBasell plans to maintain average operating rates of 85% for North American olefins and polyolefins (O&P) assets, and 75% for European O&P as well as Intermediates & Derivatives assets, in accordance with global market demand.
Despite the current challenging economic conditions and a slower recovery in China, the company remains committed to its long-term strategy. LyondellBasell is focused on advancing in Circular & Low Carbon Solutions. Its Value Enhancement Program is benefiting shareholders.
Price Performance
Shares of LyondellBasell have gained 12.8% in the past year compared with a 13.7% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
LyondellBasell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space include Livent Corporation and Carpenter Technology Corporation (CRS - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and PPG Industries, Inc. (PPG - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%.
The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 71.1% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 6.8% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 9.5% in the past year.
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LyondellBasell (LYB) Q2 Earnings Beat Estimates, Sales Lag
LyondellBasell Industries N.V. (LYB - Free Report) recorded second-quarter 2023 profit of $715 million or $2.18 per share, reflecting a fall of 56.2% from the year-ago quarter's profit of $1,644 million or $4.98 per share.
LYB posted adjusted earnings of $2.44 per share, down 53% from the year-ago quarter figure of $5.19. However, adjusted earnings surpassed the Zacks Consensus Estimate of $2.29.
The company’s net sales in the second quarter were $10,306 million, which lagged the Zacks Consensus Estimate of $10,396.5 million. Net sales decreased around 30.5% from $14,838 million in the prior-year quarter.
During the second quarter, global olefins and polyolefins margins experienced an improvement, primarily due to lower feedstock costs in the United States and Europe. The commencement of LyondellBasell's propylene oxide and oxyfuels plant in Texas contributed to new capacity but this was offset by planned maintenance at the company's existing assets. Oxyfuels margins remained strong during this period, supported by low butane costs and a strong demand for fuels. However, refining margins declined from the highs seen in the first quarter of 2023, though they remained above long-term averages.
LyondellBasell Industries N.V. Price, Consensus and EPS Surprise
LyondellBasell Industries N.V. price-consensus-eps-surprise-chart | LyondellBasell Industries N.V. Quote
Segment Highlights
In the reported quarter, the Olefins & Polyolefins — Americas division experienced a year-over-year decrease in EBITDA of approximately 28.8% to $679 million. The decline was attributed to lower margins. The segment's revenues amounted to $2,727 million, slightly below our estimate of $2,845 million.
Similarly, Olefins & Polyolefins — Europe, Asia, the international segment witnessed a decline in EBITDA to $84 million from $186 million in the prior-year quarter. Lower margins in the Polyolefins business, caused by weak demand, resulted in this decrease. The segment's revenues reached $2,729 million, above our estimate of $2,451.6 million.
In the Intermediates and Derivatives segment, EBITDA decreased approximately 30% year over year, amounting to $472 million. This decline was due to weaker propylene oxide and derivatives results due to lower demand. Sales were $2,662 million, higher than our estimate of $2,513.4 million.
The Advanced Polymer Solutions segment's EBITDA was $34 million, down from $42 million in the prior-year quarter, primarily due to lower Compounding & Solutions volumes resulting from weak demand. The segment's revenues were $960 million, above our estimate of $883.6 million.
In the Refining segment, EBITDA declined around 88.8% from the year-ago quarter to $47 million. Sales for the unit were $2,459 million, surpassing our estimate of $2,254.6 million.
The Technology segment's EBITDA for the reported quarter was $79 million, down approximately 29.5% year over year. The decrease was attributed to lower catalyst volumes caused by low demand. The segment's revenues were $154 million, higher than our estimate of $143.4 million.
Financials
LyondellBasell generated $1,290 million in cash from operating activities during the quarter. The company returned $508 million as dividends and share repurchases during the quarter.
Outlook
In the third quarter, LyondellBasell expects soft demand due to ongoing economic uncertainty to offset the usual benefits from summer seasonality. Challenging petrochemical margins are being influenced by stagnant demand, volatile feedstock costs and increased capacity in North America and China. However, the company anticipates attractive oxyfuels and refining margins, supported by summer demand for transportation fuels. During this period, LyondellBasell plans to maintain average operating rates of 85% for North American olefins and polyolefins (O&P) assets, and 75% for European O&P as well as Intermediates & Derivatives assets, in accordance with global market demand.
Despite the current challenging economic conditions and a slower recovery in China, the company remains committed to its long-term strategy. LyondellBasell is focused on advancing in Circular & Low Carbon Solutions. Its Value Enhancement Program is benefiting shareholders.
Price Performance
Shares of LyondellBasell have gained 12.8% in the past year compared with a 13.7% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
LyondellBasell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space include Livent Corporation and Carpenter Technology Corporation (CRS - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and PPG Industries, Inc. (PPG - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%.
The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 71.1% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 6.8% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 9.5% in the past year.