Highlights - Intermediate Chemicals and Derivatives business benefits from seasonal improvement in MTBE profitability. - Refining turns in a solid performance as margins strengthen and operations remain strong. - Weak demand and pricing in key businesses reflect overall global economic weakness.
HOUSTON, July 26 /PRNewswire/ -- Lyondell Chemical Company (NYSE: LYO) today announced net income for the second quarter of 2001 of $4 million, or $0.04 per share, a significant improvement over first quarter 2001.
"While operating results improved over the first quarter, Lyondell's results for the second quarter were affected by a difficult operating environment due primarily to a weak global economy," said Lyondell President and Chief Executive Officer Dan F. Smith. "Trough conditions were particularly evident for Equistar's businesses and for styrene. This effect was somewhat offset by strong performances from the fuels portion of our portfolio, which includes refining and MTBE.
"In this difficult operating environment, we stepped up our strong focus on cost control, while maintaining our commitment to safety, reliability and quality. Our actions included a further reduction in the state of readiness of our Lake Charles (LA) ethylene cracker, which has been idled since February. Further, we reduced capital spending in Equistar approximately 40 percent and in Lyondell approximately 10 percent by postponing opportunity projects until business conditions improve. In addition, our staffing levels are now lower than they were a year ago as a result of not filling all vacancies as they occur, but constantly testing innovative ways to restructure jobs."
Lyondell Earnings Summary (A) Millions of dollars 1st Half 1st Half except per share amounts 2Q2001 1Q2001 2Q2000 2001 2000 Net Income (Loss) Before Unusual Items (B) (C) (D) $4 $(28) $65 $(24) $50 Earnings (Loss) per Share Before Unusual Items (B) (C) (D) $0.04 $(0.24) $0.55 $(0.20) $0.42 Net Income (Loss) As Reported $4 $(34) $46 $(30) $352 Earnings (Loss) per Share As Reported $0.04 $(0.29) $0.39 $(0.25) $2.99 EBITDA (Lyondell and proportionate share of ventures) (B) (C) (D) $235 $174 $332 $409 $604 (A) See Consolidated Income Statements. (B) The first quarter and first half 2001 exclude an after-tax charge of $6 million, or $0.05 per share, consisting of Lyondell's share of Equistar's facility shutdown costs. (C) The second quarter 2000 excludes the after-tax extraordinary charge of $19 million, or $0.16 per share, on debt retirement. (D) The first half 2000 excludes the net after-tax benefit from unusual items of $302 million, or $2.57 per share, which consists of the gain on the sale of assets to Bayer less the extraordinary charges on debt retirement.
The net income of $4 million, or $0.04 per share, in the second quarter 2001 compares to a first quarter net loss of $28 million, or $0.24 per share, excluding unusual items. Higher profitability for MTBE and refining, as well as improved results in Equistar's polymers business, benefited second quarter 2001 results. Second quarter 2001 net income before unusual items decreased $61 million from the second quarter of 2000. The second quarter of last year was characterized by good margins and sales volumes due to very strong global economic conditions.
For the first six months of 2001, Lyondell had a net loss before unusual items of $24 million, or $0.20 per share. This compares to net income before unusual items of $50 million, or $0.42 per share, for the first six months of 2000.
EBITDA (earnings before net interest, taxes, depreciation and amortization), adjusted for unusual and extraordinary items, for Lyondell and the proportionate share of its joint ventures was $235 million in the second quarter 2001. This compares to $174 million in the first quarter 2001 and $332 million in the second quarter 2000.
INTERMEDIATE CHEMICALS AND DERIVATIVES (IC&D)
The IC&D segment includes PO and derivatives, styrene monomer and MTBE. EBITDA for the second quarter 2001 was $128 million. This compares to first quarter 2001 EBITDA of $97 million and second quarter 2000 EBITDA of $205 million.
The increase in EBITDA from the first quarter of 2001 is due to a seasonal upturn in MTBE margins and volumes, lower feedstock costs for PO and derivatives products, and lower energy costs. These factors offset lower sales volumes for PO and derivatives, which fell 10% compared to the first quarter 2001 primarily because of a seasonal decline in deicer sales. Most of the reduction from the second quarter of 2000 can be attributed to the styrene business, where volumes contracted 11% from the prior year and margins were down significantly. Lower margins and volumes of products sold into the polyurethane market account for much of the remaining decline, compared to last year's results.
EQUISTAR CHEMICALS, LP
Equistar's EBITDA for the second quarter 2001 was $96 million, an increase of $27 million from the first quarter 2001, excluding a $22 million charge associated with the shutdown of Equistar's Port Arthur (TX) facility in the first quarter 2001. Equistar's EBITDA in the second quarter of 2000, which was characterized by a very strong economy and strong export demand, was $271 million.
Equistar's Petrochemicals segment reported EBITDA of $131 million in the second quarter compared to $166 million in the first quarter of 2001. The decrease primarily resulted from ethylene and co-product price declines, which more than offset declines in energy and raw material costs. For the quarter, petrochemical sales volumes declined 4% from the first quarter as the domestic economy continued to weaken.
Equistar's Polymers segment reported EBITDA of a negative $9 million in the second quarter 2001 compared to a negative $75 million in the first quarter 2001. The sequential improvement is the result of polymer prices declining slower than ethylene and energy costs. Sales volumes for polymers fell 3% due to the weak domestic economy.
In response to a very difficult current environment, Equistar further reduced the state of readiness of its Lake Charles (LA) ethylene cracker, which has been idled since February 2001. This move positioned Equistar to satisfy market demand more cost-effectively from its other facilities.
LYONDELL-CITGO REFINING LP (LCR)
LCR had EBITDA of $108 million in the second quarter of 2001, compared with $86 million in the first quarter of the year, and $24 million in the second quarter 2000.
LCR's second quarter 2001 performance is the result of good operating performance, lower energy and fixed costs, and improved profitability on crude oil refining compared to the first quarter 2001. These benefits were partially offset by the effects of Tropical Storm Allison, which resulted in a 10-day period of reduced operating rates in June. This negatively impacted LCR's second quarter results by approximately $13 million.
LCR has scheduled a major turnaround in the fourth quarter of this year that is expected to reduce crude processing rates in the quarter to approximately 200,000 barrels per day. In order for LCR to process crude supply agreement (CSA) contract volumes for the year, deliveries of CSA crude were accelerated in the second quarter and will be further accelerated into the third quarter. During the second quarter, CSA crude processing rates rose to 236,000 barrels per day compared to 231,000 barrels per day during the first quarter. The total crude oil processing rate during the second quarter was 256,000 barrels per day versus 259,000 barrels per day in the first quarter.
LCR anticipates total crude processing rates in the third quarter to average 264,000 barrels per day with CSA rates of approximately 254,000 barrels per day.
OUTLOOK
"For the second half of the year, we expect continued weak conditions for global chemical markets," Smith said. "While we may see some modest improvement for the PO and derivatives business, we expect pricing pressures, typical of trough conditions, for Equistar and for our styrene business. We also expect MTBE margins to deteriorate from second-quarter levels, due to a seasonal decline for the business and reduced gasoline demand. Results in the fourth quarter also will be significantly impacted by the shutdown of major refining units at LCR for the planned maintenance turnaround."
Sales Revenues 1st Half 1st Half Millions of dollars 2Q2001 1Q2001 2Q2000 2001 2000 Reported sales revenues $902 $857 $976 $1,759 $2,112 Total sales revenues - all businesses in which Lyondell participates (A) $3,487 $3,585 $3,814 $7,072 $7,696 Lyondell's proportionate share of the sales revenues of businesses in which it participates (A) $2,145 $2,151 $2,312 $4,296 $4,735 (A) Includes revenues from sales to affiliates.
Lyondell Chemical Company (www.lyondell.com ), with headquarters in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number two supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production.
Through its 41% interest in Equistar Chemicals, LP, Lyondell also is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder.
Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel.
Lyondell is the third largest methanol producer in the U.S., through its 75% interest in Lyondell Methanol Company, L.P.
The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, future global economic conditions, availability of capital markets, industry production capacity and operating rates, the supply/demand balance for Lyondell's and its joint ventures' products, competitive products and pricing pressures, further increases in raw material and/or energy costs, changes in governmental regulations and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Lyondell's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Securities and Exchange Commission in March 2001, and Lyondell's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, which will be filed in August 2001.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
(Millions of dollars)
Lyondell Chemical
Company Lyondell and
(Excluding Proportionate
Equity Joint Ventures Share of
Investments) Equistar LCR LMC Equity
(A) 100% 100% 100% Investments (B)
Three months ended
June 30, 2001:
Sales and other
operating revenues (C) $902 $1,600 $932 $53 $2,145
SG&A and R&D 49 55 14 2 81
EBITDA 128 96 108 6 235
Depreciation and
amortization 67 (D) 81 27 2 115
Net interest expense 94 (D) 45 15 --- 121
Capital expenditures 29 29 18 --- 51
Dividends 26 26
Three months ended
March 31, 2001:
Sales and other
operating revenues (C) $857 $1,773 $910 $45 $2,151
SG&A and R&D 47 56 14 1 79
EBITDA before unusual
charges 97 69 86 (2) 174
Depreciation and
amortization 65 (D) 78 28 3 113
Net interest expense 92 (D) 46 16 --- 120
Capital expenditures 11 24 11 --- 27
Dividends 27 27
Three months ended
June 30, 2000:
Sales and other
operating revenues (C) $976 $1,899 $901 $38 $2,312
SG&A and R&D 40 59 14 3 75
EBITDA before
extraordinary item 205 271 24 2 332
Depreciation and
amortization 66 (D) 75 30 3 114
Net interest expense 103 (D) 44 16 --- 130
Capital expenditures 12 28 18 --- 34
Dividends 26 26
(A) Consists of the operations of the Intermediate Chemicals and
Derivatives business segment.
(B) This column reflects a combined total of Lyondell's 100% owned
operations and its pro rata share of each joint venture's operations
and is not a presentation in accordance with generally accepted
accounting principles. Lyondell currently owns a 41% interest in
Equistar Chemicals, LP ("Equistar"), a 58.75% interest in LYONDELL-
CITGO Refining LP ("LCR") and a 75% interest in Lyondell
Methanol Company, L.P. ("LMC").
(C) Includes revenues from sales to affiliates.
(D) "Depreciation and amortization" and "net interest expense" both
include approximately $4 million, $3 million and $5 million of non-
cash amortization of debt issuance costs in the three-month periods
ended June 30, 2001, March 31, 2001, and June 30, 2000,
respectively.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three For the six
INCOME STATEMENTS months months
(Millions of dollars, except ended June 30, ended June 30,
per share data) 2001 2000 2001 2000
Sales and other operating revenues $902 $976 $1,759 $2,112
Operating costs and expenses:
Cost of sales 761 769 1,516 1,721
Selling, general and
administrative expenses 41 33 80 88
Research and development 8 7 16 21
Amortization of goodwill and
other intangibles 26 25 50 53
Operating income 66 142 97 229
Income (loss) from equity investment
in Equistar (2) 72 (24) 105
Income (loss) from equity investment
in LCR 41 (10) 68 6
Income from other equity investments 3 4 --- 5
Interest expense, net (94) (103) (186) (260)
Other income (expense), net (1) (1) 2 (6)
Gain on sale of assets --- --- --- 544
Income (loss) before income taxes
and extraordinary item 13 104 (43) 623
Provision for (benefit from) income
taxes 9 39 (13) 241
Income (loss) before
extraordinary item 4 65 (30) 382
Extraordinary loss, net of income
taxes --- (19) --- (30)
Net income (loss) $4 $46 $(30) $352
Basic earnings per share:
Income (loss) before
extraordinary item $0.04 $0.55 $(0.25) $3.25
Net income (loss) $0.04 $0.39 $(0.25) $3.00
Weighted average shares
outstanding (in thousands) 117,563 117,549 117,563 117,556
Diluted earnings per share:
Income (loss) before
extraordinary item $0.04 $0.55 $(0.25) $3.25
Net income (loss) $0.04 $0.39 $(0.25) $2.99
Weighted average shares
outstanding (in thousands) 117,961 118,154 117,563 117,800
INTERMEDIATE CHEMICALS AND
DERIVATIVES SEGMENT SELECTED
FINANCIAL AND OPERATING INFORMATION
(Millions of dollars)
Sales and other operating revenues $902 $976 $1,759 $2,112
Operating income 66 142 97 229
EBITDA before unusual and
extraordinary charges 128 205 225 368
Sales Volumes (millions)
PO and derivatives (pounds) (A) 648 693 1,370 1,880
Co-products:
Styrene monomer (pounds) 790 888 1,579 1,788
TBA and derivatives (gallons) 321 308 566 592
(A) Includes propylene oxide ("PO"), PO derivatives and isocyanates. The
polyols business sold to Bayer on March 31, 2000 is included through
the date of sale.
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
For the six months
ended June 30,
STATEMENTS OF CASH FLOWS 2001 2000
Net income (loss) $(30) $352
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Gain on sale of assets --- (544)
Depreciation and amortization 132 150
Extraordinary loss --- 30
Accounts receivable 75 (103)
Inventories (6) 16
Accounts payable (106) (15)
Changes in other working capital
and other, net (98) (19)
Net cash used in operating activities (33) (133)
Proceeds from sale of assets, net of cash sold --- 2,424
Expenditures for property, plant and equipment (40) (31)
Contributions and advances to affiliates (40) (13)
Distributions from affiliates in excess
of earnings 20 31
Other --- (32)
Net cash (used in) provided
by investing activities (60) 2,379
Repayments of long-term debt (5) (2,061)
Dividends paid (53) (52)
Other (3) (18)
Net cash used in financing activities (61) (2,131)
Effect of exchange rate changes on cash (1) (2)
(Decrease) increase in cash and cash
equivalents $(155) $113
LYONDELL CHEMICAL COMPANY
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
June 30, December 31,
BALANCE SHEET 2001 2000
Cash and cash equivalents $105 $260
Accounts receivable, net 420 508
Inventories 390 392
Prepaid expenses and other current assets 66 49
Deferred tax assets 132 136
Total current assets 1,113 1,345
Property, plant and equipment, net 2,321 2,429
Investments and long-term receivables:
Investment in PO joint ventures (A) 652 621
Investment in Equistar 574 599
Receivable from LCR 229 229
Investment in LCR 44 20
Investment in LMC 43 49
Other investments and long-term receivables 83 88
Goodwill, net 1,111 1,152
Other assets 515 515
Total assets $6,685 $7,047
Accounts payable $284 $399
Current maturities of long-term debt 11 10
Other accrued liabilities 258 325
Total current liabilities 553 734
Long-term debt, less current maturities 3,838 3,844
Other liabilities 483 441
Deferred income taxes 686 702
Minority interest 165 181
Stockholders' equity (117,562,920 and
117,560,333 shares outstanding respectively
at June 30, 2001 and December 31, 2000) 960 1,145
Total liabilities and stockholders' equity $6,685 $7,047
Investment in Equistar, December 31, 2000 $599
Lyondell's share of Equistar net loss (25)
Investment in Equistar, June 30, 2001 $574
Investment in LCR, December 31, 2000 $20
Lyondell's share of LCR net income 68
Cash distributions from LCR (52)
Cash contributions to LCR 8
Investment in LCR, June 30, 2001 $44
Investment in LMC, December 31, 2000 $49
Lyondell's share of LMC net loss (1)
Cash distributions from LMC (8)
Cash contributions to LMC 3
Investment in LMC, June 30, 2001 $43
(A) Lyondell has entered into joint ventures with Bayer in conjunction
with the March 2000 asset sale and the December 2000 agreement for
joint construction of PO-11.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
For the three For the six
months months
INCOME STATEMENTS ended June 30, ended June 30,
(Millions of dollars) 2001 2000 2001 2000
Sales and other operating
revenues (A) $1,600 $1,899 $3,373 $3,757
Operating costs and expenses:
Cost of sales 1,522 1,634 3,245 3,332
Selling, general and
administrative expenses 45 49 91 93
Research and development 10 10 20 19
Amortization of goodwill 9 8 17 16
Restructuring and unusual
charges --- --- 22 ---
Operating income (loss) 14 198 (22) 297
Interest expense, net (45) (44) (91) (89)
Other income (expense), net 1 (2) 6 ---
Net income (loss) (B) $(30) $152 $(107) $208
SELECTED FINANCIAL AND OPERATING
INFORMATION
(Millions of dollars)
Sales and Other Operating
Revenues (A)
Petrochemicals segment $1,475 $1,770 $3,164 $3,486
Polymers segment 516 595 1,058 1,211
Intersegment eliminations (391) (466) (849) (940)
Total $1,600 $1,899 $3,373 $3,757
Other Operating Expenses (C)
Petrochemicals segment $1 $2 $7 $4
Polymers segment 19 19 37 36
Unallocated 44 46 84 88
Total $64 $67 $128 $128
Operating Income (Loss)
Petrochemicals segment $81 $267 $196 $439
Polymers segment (23) (23) (112) (54)
Unallocated (44) (46) (106) (88)
Total $14 $198 $(22) $297
EBITDA
Petrochemicals segment $131 $316 $297 $539
Polymers segment (9) (10) (84) (29)
Unallocated (26) (35) (70) (61)
Total $96 $271 $143 $449
EBITDA before unusual charges $96 $271 $165 $449
Sales Volumes (A)
Selected petrochemical products
(millions):
Ethylene, propylene and other
olefins (pounds) 4,072 4,606 8,313 9,508
Aromatics (gallons) 98 109 188 211
Polymers products (millions of
pounds) 1,396 1,474 2,837 3,141
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, Equistar is not subject to federal income taxes.
(C) Other Operating Expenses include SG&A, R&D and amortization of
goodwill.
LYONDELL CHEMICAL COMPANY
EQUISTAR CHEMICALS, LP
SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Millions of dollars)
June 30, December 31,
BALANCE SHEETS 2001 2000
Cash and cash equivalents $57 $18
Accounts receivable, net 611 758
Inventories 542 506
Prepaid expenses and other current assets 21 50
Total current assets 1,231 1,332
Property, plant and equipment, net 3,759 3,819
Goodwill, net 1,069 1,086
Other assets 332 345
Total assets $6,391 $6,582
Accounts payable $414 $487
Current maturities of long-term debt 190 90
Other accrued liabilities 150 166
Total current liabilities 754 743
Long-term debt, less current maturities 2,058 2,158
Other liabilities 149 141
Partners' capital 3,430 3,540
Total liabilities and partners' capital $6,391 $6,582
For the three months For the six months
ended June 30, ended June 30,
SELECTED CASH FLOW INFORMATION 2001 2000 2001 2000
Depreciation and amortization $81 $75 $159 $152
Cash flow from operations 249 272 95 259
Capital expenditures 29 28 53 48
LYONDELL CHEMICAL COMPANY
LYONDELL-CITGO REFINING LP
SELECTED FINANCIAL AND OPERATING INFORMATION (UNAUDITED)
CONDENSED BALANCE SHEETS June 30, December 31,
(Millions of dollars) 2001 2000
Total current assets $262 $310
Property, plant and equipment, net 1,305 1,319
Deferred charges and other assets 59 67
Total assets $1,626 $1,696
Notes payable $--- $450
Other current liabilities 313 417
Long-term debt 450 ---
Loans payable to partners 264 264
Other liabilities and deferred credits 61 57
Partners' capital 538 508
Total liabilities and partners' capital $1,626 $1,696
For the three For the six
months months
INCOME STATEMENTS ended June 30, ended June 30,
(Millions of dollars) 2001 2000 2001 2000
Sales and other operating
revenues (A) $932 $901 $1,842 $1,760
Operating costs and expenses:
Cost of sales 837 893 1,675 1,704
Selling, general and
administrative expenses 14 14 28 28
Operating income (loss) 81 (6) 139 28
Interest expense, net (15) (16) (31) (28)
Net income (loss) (B) $66 $(22) $108 $---
SELECTED CASH FLOW INFORMATION
(Millions of dollars)
Depreciation and amortization $27 $30 $55 $56
Cash flow from operations 53 2 90 27
Capital expenditures 18 18 29 35
EBITDA before unusual charges $108 $24 $194 $84
SELECTED OPERATING INFORMATION
Sales Volumes (including
intersegment sales) (A)
Refined products (thousand barrels
per day):
Gasoline 113 122 110 114
Diesel and heating oil 70 60 70 63
Jet fuel 21 12 20 14
Aromatics 7 11 8 10
Other refinery products 105 81 106 99
Total refined products volumes 316 286 314 300
Refinery Runs
Crude processing rates (thousand
barrels per day):
Crude Supply Agreement - coked 236 138 233 159
Other heavy crude oil - coked 11 --- 17 20
Other crude oil 9 55 7 38
Total crude oil 256 193 257 217
(A) Includes revenues/volumes from sales to affiliates.
(B) As a partnership, LCR is not subject to federal income taxes.
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SOURCE Lyondell Chemical Company
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CONTACT: media, Anne M. Knisely, +1-713-309-2643, or investors, Patrick Quarles, +1-713-309-7141, both of Lyondell Chemical Company
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