LyondellBasell hikes dividend as cheap US natural gas boosts profitability
14 Aug 2014
LyondellBasell on Wednesday announced an interim dividend of $0.70 per share as the company heaped profits from cheap shale gas supplies in the US, which has now emerged as one of the world's largest sources of natural gas.
LyondellBasell said its supervisory board has authorised the company's management board to declare an interim dividend of $0.70 per share, with an ex-dividend date of 21 August 2014.
With US natural gas prices falling from the highs of $13 per million British thermal units in 2009 to a $3 to $4 range today, the biggest beneficiary has been LyondellBasell along with a few dozen industries in the chemicals business.
Ethane, refined from natural gas, and naphtha, a crude oil derivative, are the prime raw materials used to produce ethylene, an important raw material for petrochemical industries.
With booming US natural gas supplies, the price of ethane had fallen from 90 cents per gallon to 30 cents by 2012, giving US chemical producers a huge advantage over competitors in Europe and Asia that are dependent on pricey oil-based naphtha as a feedstock.
LyondellBasell's cracker plants in Clinton, Iowa and Morris, Ill, are situated near natural gas liquid pipelines and a hub in Kansas, home of some of the cheapest ethane in America. Almost overnight they were transformed, churning out profit margins of 32 cents per pound compared to European naphtha-based ethylene, which is barely even profitable.
LyondellBasell said the interim dividend will be paid on 8 September 2014 to shareholders whose names are on the register of the shareholders as of 25 August 2014.
The company has been paying shareholders $2.80 per share annually in dividends.
Analysts say a consensus earnings estimate for the current quarter covering the stock is $2.21 per share, which would be $0.70 better than the year-ago quarter and a $0.19 sequential increase. The full-year EPS estimate of $8.07 would be a $1.31 improvement when compared to the previous year's annual results.
The quarterly earning estimate is based on a consensus revenue forecast of the current quarter of $11.87 billion. If realised, that would be a 6.46 per cent increase over the year-ago quarter.
LyondellBasell Industries NV, with a current market cap of $56.32 billion, was trading at $109.05 in the morning.
The company's stock has been trading between $108.65 and $110.14 in recent times against $67.52 and $110.38 over the past year.
LyondellBasell has seen its shares return 500 per cent since it emerged from bankruptcy four years ago.
LyondellBasell is one of the world's largest plastics, chemical and refining companies and a member of the S&P 500 Index.
The company manufactures products at more than 55 sites in 18 countries and its products and technologies are used around the world in packaging, electronics, automotive parts, home furnishings, construction materials and biofuels.