LyondellBasell reports first quarter earnings of $943 million

LyondellBasell Industries has reported earnings from continuing operations of $943 million (or $1.72 diluted earnings per share) for the first quarter of 2014. Earnings before interest, depreciation and amortisation (EBITDA) stood at $1,668 million. 

For the three months ended 31 March 2014 EBITDA decreased $147 million compared to the fourth quarter of 2013 (three months ended 31 December 2013) and by $162 million compared to the first quarter 2013.

EBITDA increased by $241 million compared to the fourth quarter of 2013. Excluding the benefits of $52 million from an environmental settlement in the first quarter and $25 million from an insurance settlement in the fourth quarter, EBITDA increased by $214 million.

First quarter results were negatively impacted by olefin and polyethylene outages related to cold weather and maintenance activity as well as ethylene purchases and inventory build in preparation for the La Porte site turnaround.

The first quarter 2014 income from continuing operations benefitted from $52 million related to an environmental indemnity settlement. There was no tax impact associated with this credit. The effect on diluted earnings per share was $0.09, LyondellBasell said in a release.

"The first quarter results were good despite headwinds from maintenance, weather-related raw material cost volatility, and shipping delays. Exclusive of these pressures, the underlying business fundamentals remained strong and relatively unchanged," said Jim Gallogly, chief executive of LyondellBasell Industries.

"In the US, our key raw materials continue to be in abundant supply with ethane tracking natural gas prices. Although natural gas prices increased in the face of record winter temperatures, current pricing and the outlook have moderated reflecting the strength of US shale developments," Gallogly said.

During late March, the company completed a 200 million pound per year polyethylene expansion at Matagorda and began the final steps of our La Porte ethylene expansion. Additionally in mid-April, Gallogly said, the company received the final environmental permits for the Corpus Christi ethylene expansion.

LyondellBasell repurchased 15 million shares during the first quarter of 2014. Shareholders of the company also approved a share repurchase programme for an additional 10 per cent of shares at the annual meeting on 16 April 2014 while the supervisory board approved a 10 cent per increase in the quarterly interim dividend to $0.70 per share.

The company expects the industry trends that developed over the past few years to continue in the near term and conditions of businesses are generally expected to be consistent with recent quarters and seasonal trends.

"During the second quarter, we expect significant planned downtime at our La Porte facility while we perform normal turnaround maintenance and additional steps to complete an 800 million pounds per year ethylene expansion. Inventory build-up in preparation for this downtime should enable us to meet customer demands while helping mitigate the financial impact on the second quarter. As we enter the summer driving season, our refining benchmark crack spread is expected to remain relatively unchanged from the first quarter," Gallogly said.

LyondellBasell manages operations through five operating segments - Olefins and Polyolefins in the Americas; Olefins and Polyolefins in Europe, Asia and elsewhere; Intermediates and derivatives; Refining; and Technology.

Compared to the prior period, the olefins margin decreased slightly in part due to higher natural gas costs and the resulting increase in NGL feedstock prices. Polyethylene price increased by 3 cents per pound while sales volumes were relatively unchanged from the fourth quarter 2013.

Polypropylene results and joint venture equity income were relatively unchanged.

An ethylene margin decline of 6 cents per pound impacted results by approximately $120 million.

Polyethylene results increased primarily driven by a 9 cent per pound higher average price.

Polypropylene results increased by approximately $30 million due to improved margins and 9 percent higher sales volumes. Joint venture equity income was relatively unchanged.

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures during the quarter stood at $343 million.

The company paid dividends of $327 million during the quarter and issued $1.0 billion in bonds at a coupon rate of 4.875 per cent.