LyondellBasell Reports 2018 Earnings
HOUSTON and LONDON, Feb. 1, 2019 /PRNewswire/ -- Highlights
Comparisons with the prior quarter and fourth quarter 2017 are available in the following table: Table 1 - Earnings Summary
LyondellBasell Industries (NYSE: LYB) today announced net income for the fourth quarter 2018 of $0.7 billion, or $1.79 per share. Fourth quarter 2018 EBITDA was $1.2 billion. Full year 2018 net income was $4.7 billion, or $12.01 per share, and EBITDA was $6.9 billion. The full year 2018 included a $346 million non-cash tax settlement that increased earnings by $0.88 per share and $73 million of transaction and integration costs that decreased earnings by $0.14 per share. Integration activities related to the acquisition of A. Schulman are on schedule with $47 million in forward annual run-rate synergies as of December 31, 2018. "During the past year LyondellBasell extended our proven track record of delivering strong earnings for our shareholders. Despite market challenges in the second half of 2018 and both planned and unplanned downtime that impacted fourth quarter earnings by approximately $225 million, we leveraged the diversity of our global business portfolio and the agility of our commercial teams to generate approximately $5.5 billion of cash from operating activities for the year. In 2018 we improved upon our company safety record and established new EBITDA records in our Intermediates & Derivatives and Technology segments through market improvements, targeted contracting strategies and an increased number of polyolefin technology licenses," said Bob Patel, LyondellBasell CEO. "Our fourth quarter results were impacted by the extraordinary fall in the price of crude oil, unusual operational events and a very difficult refining market. As oil prices fell by 40% during the fourth quarter, our non-U.S. Olefins and Polyolefins business experienced declining demand as customers delayed orders and destocked inventories in expectations of lower pricing. This destocking and associated pricing pressures compounded the effects of typical fourth quarter seasonality. Our Olefins and Polyolefins, Europe, Asia and International segment was also impacted by decreased automotive demand, low water levels on the Rhine River, extended maintenance at our Wesseling, Germany cracker and feedstock supply constraints at our Münchsmünster, Germany cracker during the fourth quarter. High U.S. gasoline inventories and unusually weak discounts for Maya crude oil pressured our fourth quarter refining margins. Nevertheless, we are well positioned to capture the benefits of expected refining market improvements with no planned maintenance at our refinery in 2019 or 2020." "With the acquisition of A. Schulman in August, we captured an opportunity to expand into new markets, created an additional platform for growth and realized $47 million in forward annual run-rate synergies, with more to come in 2019 and 2020. We managed our business portfolio by launching an innovative recycling joint venture with Suez, strengthening our joint venture footprint in Asia, divesting a carbon black subsidiary in France and working toward the consolidation of assets from Linde at our La Porte, Texas site. In February, we increased our quarterly dividend by 11% and we returned $3.4 billion to shareholders in dividends and share repurchases during 2018," Patel said. OUTLOOK "Our strong balance sheet offers optionality for investment in our organic growth pipeline and value-creating inorganic opportunities while our cash flows continue to provide significant shareholder returns," said Patel. LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT Olefins & Polyolefins - Americas (O&P-Americas) - Our O&P-Americas segment produces and markets Olefins & Co-products, polyethylene and polypropylene. Table 2 - O&P-Americas Financial Overview
Three months ended December 31, 2018 versus three months ended September 30, 2018 - EBITDA decreased by $73 million versus the third quarter 2018. Compared with the prior period, olefins results increased by approximately $70 million. Ethylene margin improved primarily due to improved ethylene price and a decline in the price of Gulf Coast ethane. Polyolefin results declined approximately $115 million primarily due to a decrease of approximately 4 cents per pound in the polyethylene spread over ethylene. Joint venture equity income decreased by $10 million. Three months ended December 31, 2018 versus three months ended December 31, 2017 - EBITDA decreased $138 million versus the fourth quarter 2017. Compared with the prior period, olefins results decreased by approximately $55 million. Margin declined primarily due to a decrease in ethylene price. Polyolefin results decreased by approximately $65 million primarily due to declines in polyethylene margin and volume. Full year ended December 31, 2018 versus full year ended December 31, 2017 - EBITDA decreased $137 million versus 2017. Full year results were negatively impacted by last-in, first-out (LIFO) inventory charges that were approximately $50 million higher than 2017. Compared with the prior period, olefins results decreased by approximately $445 million. Margin declined primarily due to a decrease in ethylene price of approximately 6 cents per pound. Polyolefin results increased by approximately $360 million driven by spread improvements in polyethylene and polypropylene over monomer of approximately 7 cents per pound and 3 cents per pound, respectively. Joint venture equity income increased by $16 million. Olefins & Polyolefins - Europe, Asia, International (O&P-EAI) - Our O&P-EAI segment produces and markets Olefins & Co-products, polyethylene and polypropylene. Table 3 - O&P-EAI Financial Overview
Three months ended December 31, 2018 versus three months ended September 30, 2018 - EBITDA decreased by $135 million versus the third quarter 2018. The fourth quarter benefited $36 million from the sale of our carbon black subsidiary in France. Compared with the prior period, olefins results decreased by approximately $75 million. Volume declined due to planned and unplanned maintenance at our cracker in Wesseling, Germany and as a result of low water levels on the Rhine. Combined polyolefins results decreased approximately $35 million primarily due to decreased margins. Joint venture equity income decreased by $43 million primarily due to planned maintenance. Three months ended December 31, 2018 versus three months ended December 31, 2017 - EBITDA decreased by $162 million versus the fourth quarter 2017. The fourth quarter 2018 benefited $36 million from the sale of our carbon black subsidiary in France. Compared with the prior period, olefins results decreased approximately $70 million. Volume declined due to planned and unplanned maintenance at our cracker in Wesseling, Germany and as a result of low Rhine River levels. Combined polyolefins results decreased approximately $90 million. Polyolefin margins declined driven by spread decreases in polyethylene and polypropylene over monomer of approximately 3 cents and 4 cents per pound, respectively. Joint venture equity income decreased by $43 million primarily due to planned maintenance. Full year ended December 31, 2018 versus full year ended December 31, 2017 - EBITDA decreased by $764 million versus 2017, which included a gain of $108 million on the sale of our interest in Geosel. 2018 results included benefits of $36 million from the gain on the sale of our carbon black subsidiary in France and approximately $95 million due to an increase in the euro versus the U.S. dollar exchange rate relative to 2017. Compared with the prior period, olefins results decreased approximately $370 million. Margin declined with increased feedstock costs partially offset by increased ethylene prices. Volume declined approximately 10% primarily due to planned and unplanned maintenance at our Wesseling, Germany cracker and low Rhine River levels in the second half of 2018. Combined polyolefins results decreased approximately $345 million. Polyolefin margins declined driven by spread decreases in polyethylene and polypropylene over monomer of approximately 3 cents per pound and 2 cents per pound, respectively. Joint venture equity income decreased by $46 million primarily due to reduced polyolefin spreads. Intermediates & Derivatives (I&D) - Our I&D segment produces and markets Propylene Oxide & Derivatives, Oxyfuels & Related Products and Intermediate Chemicals, such as styrene monomer, acetyls, ethylene oxide and ethylene glycol. Table 4 - I&D Financial Overview
Three months ended December 31, 2018 versus three months ended September 30, 2018 - EBITDA decreased $125 million versus the third quarter 2018. Compared with the prior period, Propylene Oxide & Derivatives results decreased approximately $10 million. Volumes declined primarily due to planned maintenance partially offset by improved margins. Intermediate Chemicals results decreased approximately $65 million. Margins declined for most products, primarily acetyls and styrene. Oxyfuels & Related Products results decreased approximately $40 million. Margin declined primarily due to stronger ethanol pricing relative to crude oil and volume declined due to planned maintenance. Three months ended December 31, 2018 versus three months ended December 31, 2017 - EBITDA decreased $31 million versus the fourth quarter 2017. Compared with the prior period, Propylene Oxide & Derivatives results decreased approximately $50 million with volumes declining due to 2018 planned maintenance. Intermediate Chemicals results increased approximately $35 million. Margins improved for most products and volume increased for acetyls and styrene. Oxyfuels & Related Products decreased by approximately $30 million with declines in both margins and volumes. Full year ended December 31, 2018 versus full year ended December 31, 2017 - EBITDA increased $521 million versus 2017, setting an annual record for 2018. Compared with the prior period, Propylene Oxide & Derivatives results increased approximately $65 million with improved margins due to strong demand, tight market conditions and improved contracting strategies. Intermediate Chemicals results increased approximately $345 million driven by margin improvements in all products and improved contracting strategies. Tight industry conditions drove an increase of over 12% in acetyls prices and a styrene margin increase of 3 cents per pound. Oxyfuels & Related Products increased by approximately $100 million. Margins improved with crude oil pricing outpacing butane and volume increased with no planned maintenance in 2018. Advanced Polymer Solutions (APS) - Our Advanced Polymer Solutions segment produces and markets in two lines of business: Compounding & Solutions and Advanced Polymers. Compounding & Solutions includes polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders. Advanced Polymers consists of Catalloy and polybutene-1. A. Schulman was acquired on August 21, 2018, and results from the new business are included prospectively. Table 5 - Advanced Polymer Solutions Financial Overview
Three months ended December 31, 2018 versus three months ended September 30, 2018 - EBITDA increased by $16 million versus the third quarter 2018. Transaction and integration costs related to the acquisition of A. Schulman were $29 million lower in the fourth quarter 2018 versus the third quarter. Compared with the prior period, Compounding & Solutions results increased approximately $15 million with a full quarter of contribution from the addition of A. Schulman product lines partially offset by volume and margin declines in polypropylene compounds. Advanced Polymers results decreased approximately $15 million with declines in both margins and volume. Three months ended December 31, 2018 versus three months ended December 31, 2017 - EBITDA increased by $4 million versus the fourth quarter 2017. Integration costs related to the acquisition were $20 million during the fourth quarter 2018. Compared with the prior period, Compounding & Solutions results increased approximately $25 million. The addition of new product lines from the acquisition were partially offset by volume and margin declines in polypropylene compounds. Advanced Polymers results were relatively unchanged. Full year ended December 31, 2018 versus full year ended December 31, 2017 - EBITDA decreased by $38 million versus 2017. Transaction and integration costs related to the acquisition and assigned to the segment were $69 million during 2018. Compared with the prior period, Compounding & Solutions results increased approximately $15 million. The addition of new product lines from the acquisition was partially offset by margin and volume declines in polypropylene compounds. Advanced Polymers results increased approximately $15 million primarily due to an increase in volume. Refining - Our Refining segment produces and markets gasoline and distillates, including diesel fuel, heating oil and jet fuel. Table 6 - Refining Financial Overview
Three months ended December 31, 2018 versus three months ended September 30, 2018 - EBITDA decreased $168 million versus the third quarter 2018. The Maya 2-1-1 industry benchmark crack spread decreased by $10.54 per barrel to $10.89 per barrel. The Houston Refinery operated at 184,000 barrels per day, 48,000 barrels per day less than the prior period with planned maintenance beginning in September. Three months ended December 31, 2018 versus three months ended December 31, 2017 - EBITDA decreased $188 million versus the fourth quarter 2017. The Maya 2-1-1 industry benchmark crack spread decreased by $9.37 per barrel to $10.89 per barrel. The Houston Refinery operated at 184,000 barrels per day, 61,000 barrels per day less than the prior period with planned maintenance in the fourth quarter 2018. Full year ended December 31, 2018 versus full year ended December 31, 2017 - EBITDA increased $10 million versus 2017. Margin increased at our Houston Refinery primarily driven by advantaged Canadian crude oil pricing and improved yields. The Maya 2-1-1 industry benchmark crack spread decreased by $0.71 per barrel to $19.85 per barrel. Crude throughput was similar to 2017 with a decline of 5,000 barrels per day to 231,000 barrels per day. Technology - Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts. Table 7 - Technology Financial Overview
Three months ended December 31, 2018 versus three months ended September 30, 2018 - EBITDA decreased by $37 million versus the record third quarter 2018 results primarily due to a decrease in licensing revenue. Three months ended December 31, 2018 versus three months ended December 31, 2017 - EBITDA decreased by $7 versus the fourth quarter 2017 primarily due to a decrease in licensing revenue. Full year ended December 31, 2018 versus full year ended December 31, 2017 - EBITDA increased by $105 million versus 2017. The increase was driven by higher licensing revenue as revenues from several new licenses, primarily in China, were recognized. Capital Spending and Cash Balances Reconciliations and Additional Information CONFERENCE CALL The toll-free dial-in number in the U.S. is 800-475-8402. A complete listing of toll-free numbers by country is available at www.LyondellBasell.com/teleconference for international callers. The passcode for all numbers is 6934553. The slides and webcast that accompany the call will be available at www.LyondellBasell.com/earnings. A replay of the call will be available from 2:30 p.m. EST February 1 until April 2 at 1:59 a.m. EDT. The replay dial-in numbers are 866-444-9039 (U.S.) and +1 203-369-1136 (international). The passcode for each is 6482. ABOUT LYONDELLBASELL FORWARD-LOOKING STATEMENTS INFORMATION RELATED TO FINANCIAL MEASURES EBITDA, as presented herein, may not be comparable to a similarly titled measure reported by other companies due to differences in the way the measure is calculated. We calculate EBITDA as income from continuing operations plus interest expense (net), provision for (benefit from) income taxes, and depreciation & amortization. EBITDA should not be considered an alternative to profit or operating profit for any period as an indicator of our performance, or as an alternative to operating cash flows as a measure of our liquidity. Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 9 at the end of this release. Additional operating and financial information, including reconciliations of non-GAAP measures, may be found on our website at www.LyondellBasell.com/investorrelations. OTHER FINANCIAL MEASURE PRESENTATION NOTES
SOURCE LyondellBasell Industries For further information: Media Contact: Michael Waldron +1 713-309-7575 OR Investor Contact: David Kinney +1 713-309-7141
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