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LyondellBasell Results

LyondellBasell Reports 2020 Earnings

HOUSTON and LONDON, Jan. 29, 2021 /PRNewswire/ —  

Full Year 2020 Highlights

Resilient Earnings

  • Net Income: $1.4 billion, $1.9 billion excluding LCM and Impairment1
  • Diluted earnings per share: $4.24 per share, $5.61 per share excluding LCM and Impairment
  • EBITDA: $3.3 billion, $3.9 billion excluding LCM and Impairment

Advanced Growth Initiatives

  • Expanded polyethylene capacity with new 500 kt per year Hyperzone plant in Texas
  • New joint ventures in China and Louisiana; both accretive to earnings in the fourth quarter
  • Expanded circular polymers joint venture capacity by 20 kt in Belgium

Strong Cash Conversion and Dividends

  • 88% conversion of EBITDA (excluding LCM and Impairment) to cash from operating activities
  • Paid $4.20 per share in dividends; our tenth consecutive year of increasing total quarterly dividends

Fourth Quarter 2020 Highlights

  • Net Income: $0.9 billion, $0.7 billion excluding LCM and Impairment
  • Diluted earnings per share: $2.55 per share, $2.19 per share excluding LCM and Impairment
  • Highest fourth quarter EBITDA since 2017: $1.4 billion, $1.3 billion excluding LCM and Impairment
  • Refinanced $2.4 billion of debt to extend maturities and capture attractive interest rates
  • Liquidity of $5.2 billion as of December 31, 2020

LyondellBasell Industries (NYSE: LYB) today announced net income for the fourth quarter 2020 of $0.9 billion, or $2.55 per share.  The quarter included a $147 million non-cash, lower of cost or market (LCM) inventory valuation benefit that increased net income by $119 million or $0.36 per share.  Fourth quarter EBITDA was $1.4 billion, or $1.3 billion excluding LCM. 

Full year 2020 net income was $1.4 billion, or $4.24 per share.  The full year results included a $582 million non-cash impairment charge related to the Houston refinery and $16 million of non-cash, LCM inventory valuation charges.  LCM and Impairment charges reduced full year 2020 net income by $457 million, or $1.37 per share.  Full year 2020 EBITDA was $3.3 billion, or $3.9 billion excluding LCM and impairment.  During 2020, costs for integration and restructuring impacted net income by $33 million or $0.10 per share.

“During 2020, LyondellBasell demonstrated financial and operational resilience against an extremely challenging backdrop of a global pandemic, the associated recession, volatile oil prices and significant capacity additions in our industry.  We moved swiftly to create a safe work environment for our employees and continuously supply customers with essential products throughout the pandemic.  Our strengths in operational excellence, cost management and capital discipline served us well as we quickly adapted to dynamic conditions by aggressively managing inventories, minimizing working capital and bolstering liquidity by rapidly accessing capital markets and efficiently generating cash.  LyondellBasell honored commitments to investors by both maintaining an investment grade credit rating and continuing to fund dividends and capital investments with cash from operations.  Taken together, these actions enabled us to successfully navigate a challenging year and remain focused on our strategy to build a stronger company for our stakeholders,” said Bob Patel, LyondellBasell CEO.

“During the fourth quarter, strong and persistent consumer-driven demand, industry supply constraints and continued recovery in durable goods markets reduced the impact of typical end-of-year slowdowns for our businesses.  During this period, we operated well and met robust demand for polyolefins used in consumer packaging and healthcare applications.  Margins improved for Olefins and Polyolefins, Propylene Oxide & Derivatives and Intermediate Chemicals businesses driven by higher demand and tight markets.  Rebounding automotive manufacturing drove increased volumes for our Advanced Polymer Solutions businesses.  The Refining and Oxyfuels & Related Products businesses continued to face headwinds from low global mobility resulting in stagnant demand for transportation fuels.”

“LyondellBasell nimbly managed the challenges of 2020 and our team advanced on our goal to create a stronger company for the longer term.  We expanded our participation in the rapidly growing Chinese market by forming a new integrated olefin and polyolefin joint venture with Bora.  In December, we expanded our manufacturing footprint on the U.S. Gulf Coast through the formation of an integrated polyethylene joint venture in Louisiana with Sasol.  Both joint ventures provided immediate benefits to our fourth quarter profitability without the project completion risks associated with the construction of greenfield projects.” 

“Our company remained focused on the substantive and ambitious goals outlined in our most recent Sustainability Report to develop circular and sustainable business models for our products.  We took action to advance our goals of annually producing and marketing two million tons of recycled and renewable-based polymers, including the start-up of our MoReTec molecular recycling pilot plant in Ferrara, Italy and the expansion of our mechanical recycling capacity in Europe through our Quality Circular Polymers joint venture with SUEZ.  We are dedicated to disciplined and sustainable growth that ensures our chemical and polymer products will continue to provide value for society,” Patel said.

OUTLOOK

“Improving trends seen in the closing weeks of December are continuing into the first quarter of 2021 and providing a bridge to the seasonal upticks typically seen in our businesses during the second and third quarters.  Elevated export demand to China and Latin America combined with tight markets are supporting strong margins for our Olefins and Polyolefins businesses.  Increased demand from automotive and construction markets has pushed the January order book for our Advanced Polymer Solutions segment to higher levels than the fourth quarter 2020 average.  With wider deployment of coronavirus vaccines, we anticipate that increasing mobility and transportation fuel demand could provide significant upside for our oxyfuels and refining businesses during the latter half of this year.”

“LyondellBasell’s measured approach to advancing value-driven growth is delivering results.  The Advanced Polymer Solutions platform is serving broader markets and beginning to capture the benefits from more than $200 million in synergies.  Our next-generation Hyperzone high-density polyethylene technology expanded our U.S. capacity and is establishing new benchmarks for differentiated product performance.  We formed two integrated cracker joint ventures that are quickly delivering accretive returns from high-quality assets benefiting from advantaged feedstocks and growing markets.  In January 2021, we continued on this strategy to form a new joint venture to build our second world-scale propylene oxide and styrene monomer unit in China.” 

“In the near term, the top priority for our balance sheet is debt reduction.  In January, we repaid $500 million of debt outstanding with more deleveraging planned for the remainder of 2021.  We are well-poised to harvest profitability from our disciplined growth initiatives that should increase free cash flow and allow us to further strengthen our investment grade balance sheet,” said Patel.

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
Millions of U.S. dollarsThree Months EndedYear Ended
December 31,
2020
September 30,
2020
December 31,
2019
December 31,
2020
December 31,
2019
Operating income$166$180$249$501$1,249
EBITDA2622673298331,557
LCM (benefits) charges, pre-tax(66)(22)10
EBITDA excluding LCM1962453298431,557

Three months ended December 31, 2020 versus three months ended September 30, 2020 – EBITDA decreased $49 million versus the third quarter 2020, excluding a favorable $44 million variance due to LCM inventory benefits.  Results for the fourth quarter decreased approximately $70 million due to LIFO inventory changes relative to the prior quarter.  Compared to the prior period, Propylene Oxide & Derivatives results increased more than $25 million driven by higher margins due to strong Asia demand and market tightness.  Intermediate Chemicals results were relatively unchanged.  Oxyfuels & Related Products results decreased approximately $10 million driven by lower margins partially offset by an increase in volumes.  Margins declined due to higher butane feedstock prices and further weakening of gasoline spreads.

Three months ended December 31, 2020 versus three months ended December 31, 2019 – EBITDA decreased $133 million versus the fourth quarter 2019.  Results for the fourth quarter decreased approximately $55 million due to LIFO inventory changes relative to the prior quarter.  Propylene Oxide & Derivatives results increased approximately $40 million with improved margins and higher volumes due to strong Asia demand and market tightness.  Intermediate Chemicals results increased about $50 million driven by improved volumes and higher margins in most products, primarily styrene.  Volumes increased due to higher demand for most products and absence of planned maintenance in the fourth quarter 2019.  Oxyfuels & Related Products results decreased $175 million driven by lower margins due to reduced gasoline prices and lower octane blend premiums.

Full year ended December 31, 2020 versus full year ended December 31, 2019 – EBITDA decreased $714 million versus 2019, excluding an unfavorable $10 million variance due to LCM inventory charges in 2020.  Results for 2020 decreased approximately $40 million due to LIFO inventory changes relative to the prior year.  Propylene Oxide & Derivatives results decreased $15 million due to lower margins partially offset by higher volumes due to strong Asia demand.  Intermediate Chemicals results decreased about $185 million driven by margin declines in most businesses.  Oxyfuels & Related Products decreased approximately $465 million with a significant decrease in margins driven by reduced gasoline prices and lower octane blend premiums. 

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