LyondellBasell Profits Rise in May, but Lag Q2 Forecast
HOUSTON (ICIS news)--LyondellBasell increased its May earnings from April behind strong US polymer margins, but still anticipates falling short of second-quarter expectations, the producer said on Tuesday.
May earnings before interest, taxes, depreciation, amortisation and reorganisation (EBITDAR) were $203m (€144m), up 8% from April’s EBITDAR of $188m. That increase is largely from a "significant improvement" in polymer volumes, the company said.
“Export opportunities led to strong demand and production rates,” chief operating officer Ed Dineen said during the company’s monthly conference call.
But due to an underperforming fuels segment brought on by weak refining margins, LyondellBasell said it was still “slightly lagging” its second-quarter planned EBITDAR of $637m.
The fuels segment had a year-to-date EBITDAR of $153m, barely more than half of the company’s operating forecast of $292m.
But the company remained close to its overall forecast based on the chemicals and polymers segments, which have outperformed expectations.
The chemicals segment had a year-to-date EBITDAR of $244m, compared with a $184m forecast, while the polymers segment has an EBITDAR of $205m, relative to a $156m expectation.
While the company said its chemicals performance is largely due to a sharp reduction in fixed costs, the polymers segment has recently shown growth potential, it said.
“Polyethylene (PE) was very strong this month, particularly in North America,” Dineen said.
LyondellBasell said global PE volumes increased by about 7% in May, while polypropylene (PP) volumes were up about 5%. Overall, polymer volumes were improved across the board compared with April, with a volume growth of 6%.
However, the company also warned of rising raw material costs, and said a continued strong performance would depend on whether the company was successful in implementing price increases.
“If we’re able to achieve those price increases, we should see the US piece of things particularly continue to perform well,” Dineen said.
Going forward, LyondellBasell said it expected June earnings to fall “somewhat short” of May, based largely on the expectation that polymer export opportunities should become more limited in the second half of 2009.
Likewise, within chemicals, the company anticipates its olefins segment to decline in June as increases in raw material costs have hurt ethylene production.
But the company said it guessed raw material costs would stabilise or decline in July, bringing earnings back to earlier-in-the-year levels.
LyondellBasell said it anticipated “moderate improvement” in both the chemicals and fuels segment in the third quarter, but that the focus would remain on stabilisation as opposed to growth.
“We understand our situation and the focus that it dictates,” Dineen said.
LyondellBasell has 79 affiliates under Chapter 11 bankruptcy protection and recently added 13 non-operating subsidiaries to the filing.
The company has said it seeks to improve overall results by $1.3bn/year by the end of 2010, and planned to get there through lower fixed costs as well as cutting 4,800 employees and contractors and closing 14 plants and facilities.
May earnings before interest, taxes, depreciation, amortisation and reorganisation (EBITDAR) were $203m (€144m), up 8% from April’s EBITDAR of $188m. That increase is largely from a "significant improvement" in polymer volumes, the company said.
“Export opportunities led to strong demand and production rates,” chief operating officer Ed Dineen said during the company’s monthly conference call.
But due to an underperforming fuels segment brought on by weak refining margins, LyondellBasell said it was still “slightly lagging” its second-quarter planned EBITDAR of $637m.
The fuels segment had a year-to-date EBITDAR of $153m, barely more than half of the company’s operating forecast of $292m.
But the company remained close to its overall forecast based on the chemicals and polymers segments, which have outperformed expectations.
The chemicals segment had a year-to-date EBITDAR of $244m, compared with a $184m forecast, while the polymers segment has an EBITDAR of $205m, relative to a $156m expectation.
While the company said its chemicals performance is largely due to a sharp reduction in fixed costs, the polymers segment has recently shown growth potential, it said.
“Polyethylene (PE) was very strong this month, particularly in North America,” Dineen said.
LyondellBasell said global PE volumes increased by about 7% in May, while polypropylene (PP) volumes were up about 5%. Overall, polymer volumes were improved across the board compared with April, with a volume growth of 6%.
However, the company also warned of rising raw material costs, and said a continued strong performance would depend on whether the company was successful in implementing price increases.
“If we’re able to achieve those price increases, we should see the US piece of things particularly continue to perform well,” Dineen said.
Going forward, LyondellBasell said it expected June earnings to fall “somewhat short” of May, based largely on the expectation that polymer export opportunities should become more limited in the second half of 2009.
Likewise, within chemicals, the company anticipates its olefins segment to decline in June as increases in raw material costs have hurt ethylene production.
But the company said it guessed raw material costs would stabilise or decline in July, bringing earnings back to earlier-in-the-year levels.
LyondellBasell said it anticipated “moderate improvement” in both the chemicals and fuels segment in the third quarter, but that the focus would remain on stabilisation as opposed to growth.
“We understand our situation and the focus that it dictates,” Dineen said.
LyondellBasell has 79 affiliates under Chapter 11 bankruptcy protection and recently added 13 non-operating subsidiaries to the filing.
The company has said it seeks to improve overall results by $1.3bn/year by the end of 2010, and planned to get there through lower fixed costs as well as cutting 4,800 employees and contractors and closing 14 plants and facilities.
quoted from: ICIS.com
