LyondellBasell Reports Third-Quarter 2012 Results and Announces $2.75 per share
Special Dividend
ROTTERDAM, Netherlands, Oct. 26, 2012 /PRNewswire via COMTEX/ -- Third-Quarter
2012 Highlights
$851 million income from continuing operations or $1.47 diluted earnings per
share
Third-quarter EBITDA of $1,565 million
Olefins margins in North America remain robust; approximately 85 percent of
ethylene production sourced from natural gas liquids (NGLs)
Intermediates and Derivatives achieved record performance
Announced $2.75 per share special dividend in addition to the regular $0.40 per
share interim dividend
LyondellBasell joins S&P 500 index
LyondellBasell Industries (LYB) today announced earnings for the third quarter
2012 of $851 million, or $1.47 per share. Third-quarter 2012 EBITDA was $1,565
million, inclusive of a $71 million reversal of a non-cash, lower of cost or
market inventory valuation adjustment recognized in the second quarter 2012.
Comparisons with the prior quarter and third quarter 2011 are shown below:
Table 1 - Earnings Summary(a)
Three Months EndedNine Months Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars (except share data)20122012201120122011
Sales and other operating revenues$11,273$11,248$12,516$34,255$37,202
Net income(a)8447688952,2112,358
Income from continuing operations8517689122,2132,445
Diluted earnings per share (U.S. dollars):
Net income(b)1.461.331.513.834.12
Income from continuing operations 1.471.331.543.834.27
Diluted share count (millions)577577575577570
EBITDA(c)1,5651,7741,8064,5674,819
EBITDA excluding LCM inventory1,4941,8451,8064,5674,819
valuation adjustments
(a) Includes net loss attributable to non-controlling interests and loss from discontinued operations, net of tax. See Table 11.
(b) Includes diluted loss per share attributable to discontinued operations.
(c) See the end of this release for an explanation of the Company's use of EBITDA and Table 9 for reconciliations of EBITDA to income from continuing operations.
Net income in the third quarter 2012 increased from the second quarter 2012 as a
result of lower interest and financing charges. Third quarter 2012 EBITDA was
lower than the second quarter 2012, primarily due to lower margins in European
olefins. Second quarter 2012 results included $100 million from a hurricane
insurance settlement. Results also reflect the following charges and benefits:
Table 2 - Charges (Benefits) Included in Income from Continuing Operations
Three Months EndedNine Months
Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars (except share data) 20122012201120122011
Pretax charges (benefits):
Charges and premiums related$ - -$329$ - -$329$12
to repayment of debt
Reorganization items- -- -- -(5)30
Corporate restructurings- -- -14- -75
Impairments- -- -192223
Sale of precious metals- -- -- -- -(41)
Warrants - mark to market- -- -(22)1031
Insurance settlement- -(100)- -(100)(34)
Legal recovery(24)- -- -(24)- -
Environmental accruals- -- -- -- -16
Asset retirement obligation- -- -10- -10
Lower of cost or market(71)71- -- -- -
inventory adjustment
Total pretax charges (benefits)(95)30021232122
Provision for (benefit from) income35(109)(5)(79)(15)
tax related to these items
After-tax effect of net charges (credits)($60)$191$16$153$107
Effect on diluted earnings per share$0.11($0.33)($0.03)($0.25) ($0.18)
"LyondellBasell continues to perform strongly in a volatile economic environment.
We are pleased with the third quarter and year-to-date results as the company
advances its strategy. Although the outlook for the global economy is uncertain,
we remain focused on safe and reliable operations, continuously improving our
cost structure and disciplined growth. Our robust cash generation has allowed us
to further reward shareholders through our regular interim dividend of $0.40 per
share plus a special dividend of $2.75 per share. The company's dramatic
financial improvement over the last couple of years and our significant position
within the chemical industry were acknowledged by our recent inclusion in the S&P500 index," said Jim Gallogly, LyondellBasell Chief Executive Officer.
"During the third quarter, our segments generally performed well, and results
were consistent with their specific business environments and geographic
exposures. Our olefins and polyolefins business in North America continues to
provide excellent results. In addition to stable NGL price trends throughout the
third quarter, our olefins plants utilization exceeded 100 percent of nameplate
capacity. The olefins and polyolefins segment results for Europe, Asia and
International (EAI) reflected weak European economic conditions; however,
polyolefin sales volumes improved versus the second quarter. Our Intermediates
and Derivatives business continues to demonstrate steady performance with
exceptional third-quarter oxyfuels results. Refining margins improved in line
with the change in industry spreads, but operating limitations at the Houston
refinery during the quarter impacted crude processing rates," Gallogly said. "Our
previously-announced growth projects remain on schedule. We have initiated a
review of additional olefins debottleneck projects targeted to capitalize on the
advantage of favorable North American NGL prices," Gallogly indicated.
OUTLOOK
"We have historically experienced a fourth quarter seasonal slowdown in certain
of our segments. While we expect this to recur, we do not expect a slowdown of
the severity experienced in 2011," Gallogly said.
"In North America olefins, we believe that margins will remain strong as
fundamental drivers remain intact. We do not expect to see the rapid increase in
ethane prices experienced in 2011. Conversely, we expect European olefins and
polyolefin results to remain weak in the fourth quarter. However, the
differentiated areas of Olefins and Polyolefins - EAI, including polypropylene
compounding and joint ventures, are expected to remain steady. Thus far in the
quarter, Intermediates and Derivatives segment margins have held firm except
oxyfuel margins, which have seasonally declined. We have one of our German
crackers and a U.S. PO/TBA plant finishing turnarounds during the quarter. The
Houston refinery is currently operating at normal rates," Gallogly added.
LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
LyondellBasell operates in five business segments: 1) Olefins and Polyolefins -
Americas; 2) Olefins and Polyolefins -EAI; 3) Intermediates and Derivatives; 4)
Refining; and 5) Technology.
Olefins and Polyolefins - Americas (O&P-Americas) - The primary products of this
segment include ethylene and its co-products (propylene, butadiene and benzene),
polyethylene, polypropylene and Catalloy process resins.
Table 3 - O&P-Americas Financial Overview
Three Months EndedNine Months Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars20122012201120122011
Operating income$738$700$598$1,957 $1,527
EBITDA8207766722,1941,733
EBITDA excluding LCM inventory 7498476722,1941,733
valuation adjustments
Three months ended September 30, 2012 versus three months ended June 30, 2012 -
O&P-Americas segment EBITDA increased $44 million in the third quarter 2012
versus the second quarter 2012. Excluding the second quarter 2012 hurricane
insurance settlement of $29 million and the impact of the $71 million non-cash
lower of cost or market (LCM) reversal in the third quarter 2012 to offset the
second quarter 2012 LCM inventory valuation charge, underlying EBITDA declined by
$69 million. Compared to the prior period, underlying olefins results decreased
primarily due to a decline in margins resulting from lower ethylene and
co-products prices from naphtha cracking. Ethylene production volume increased as
our olefins plants utilization exceeded 100 percent of nameplate capacity.
Combined polyolefin results decreased by approximately $25 million from the
second quarter 2012 primarily due to lower margins. Polyolefin sales volumes
increased approximately 7 percent from the prior quarter. During the third
quarter, the segment received $10 million in dividends from the Indelpro joint
venture.
Three months ended September 30, 2012 versus three months ended September 30,
2011 - O&P-Americas results increased $148 million in the third quarter 2012
versus the third quarter 2011. Excluding the impact of the $71 million non-cash
LCM reversal in the third quarter 2012 which offset the prior quarter LCM
inventory valuation charge, underlying EBITDA increased by $77 million compared
to the same period in 2011. Olefins results increased approximately $30 million
compared to the prior year period as a result of higher olefins sales more than
offsetting a 2 cents per pound decline in margin. Combined polyolefin results
improved by approximately $50 million primarily due to improved polyethylene
margins. The segment received $10 million in dividends from its Indelpro joint
venture in the third quarters of 2012 and 2011.
Olefins and Polyolefins - Europe, Asia, International (O&P-EAI) - The primary
products of this segment include ethylene and its co-products (propylene and
butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy
process resins and Polybutene-1 resins.
Table 4 - O&P-EAI Financial Overview
Three Months EndedNine Months Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars 20122012201120122011
Operating income$15$203$130$221$508
EBITDA75335247511849
Three months ended September 30, 2012 versus three months ended June 30, 2012 -
O&P-EAI segment EBITDA decreased $260 million in the third quarter 2012 versus
the second quarter 2012. Olefins results decreased approximately $210 million
from the second quarter 2012, returning the business to approximately breakeven
performance which is more reflective of the prevailing industry and economic
environment than the strong second quarter results. Olefins production volumes
declined in the third quarter 2012 due to a turnaround at Wesseling, Germany.
Combined polyolefin results increased approximately $10 million compared to the
second quarter primarily driven by approximately a 20 percent increase in
polypropylene sales volumes. Polypropylene compounds and polybutene-1 results
increased approximately $20 million from the second quarter 2012 mainly driven by
margins improvement. The segment did not receive any joint venture dividends in
the third quarter 2012 compared to $59 million in the second quarter.
Three months ended September 30, 2012 versus three months ended September 30,
2011 - O&P-EAI segment EBITDA declined $172 million versus the third quarter
2011. Olefins results declined by approximately $140 million, primarily as a
result of lower margins. Production volume was lower in the third quarter 2012
versus the corresponding period in 2011 due to a turnaround at Wesseling,
Germany. Polyolefin results increased by approximately $15 million primarily as a
result of higher polypropylene margins in the third quarter 2012. Polypropylene
compounds and polybutene-1 results were approximately $15 million higher than the
prior year due to higher margins. The third quarter in 2011 included $45 million
related to dividend payments from joint ventures.
Intermediates and Derivatives (I&D) - The primary products of this segment
include propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl
alcohol (TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives
(propylene glycol, propylene glycol ethers and butanediol), acetyls, ethylene
oxide and its derivatives, and oxyfuels.
Table 5 - I&D Financial Overview
Three Months EndedNine Months Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars 20122012201120122011
Operating income$424$390$368$1,184$971
EBITDA4754554171,3481,157
Three months ended September 30, 2012 versus three months ended June 30, 2012 -
I&D segment EBITDA increased $20 million versus the second quarter 2012. Results
for PO, PO derivatives, and intermediate chemicals were relatively unchanged.
Oxyfuels results increased by approximately $60 million, driven by higher sales
volumes and stronger margins in the third quarter 2012 compared to the prior
period. Oxyfuels margins gained strength as the crude oil-to-natural gas spread
expanded in the third quarter 2012. Second quarter 2012 EBITDA included an $18
million insurance settlement and $14 million of dividends from our Asian PO joint
ventures.
Three months ended September 30, 2012 versus three months ended September 30,
2011 - I&D EBITDA increased $58 million compared to the third quarter 2011.
Intermediate chemicals results decreased approximately $30 million versus the
prior year period mainly due to lower margins in the derivatives businesses. The
third quarter 2011 prices benefitted from several competitor outages. Oxyfuels
results improved approximately $80 million in the 2012 period primarily as a
result of stronger margins.
Refining - The primary products of this segment include gasoline, diesel fuel,
heating oil, jet fuel, and petrochemical raw materials.
Table 6 - Refining Financial Overview
Three Months EndedNine Months Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars 20122012201120122011
Operating income$114$124$390$248$806
EBITDA150161427359910
Three months ended September 30, 2012 versus three months ended June 30, 2012 -
Refining segment EBITDA decreased $11 million versus the second quarter 2012. The
Houston refinery operated at 240,000 barrels per day, down 27,000 barrels per day
from the prior quarter due to a reduction in throughput resulting from certain
operating limitations. The Maya 2-1-1 benchmark crack spread increased $3.49 per
barrel to $26.65 per barrel in the third quarter 2012. Relative to the benchmark
spread, results continue to be negatively impacted from depressed by-product
values such as petroleum coke and various natural gas-based products. The
refining segment benefitted in the third quarter from $24 million of restitution
related to a former employee's fraudulent activities and in the second quarter
from $53 million related to a hurricane insurance settlement.
Three months ended September 30, 2012 versus three months ended September 30,
2011 - Refining segment EBITDA decreased $277 million versus the third quarter
2011 due to fewer opportunities to purchase discounted crude oils, reduced
by-product values, and a 29,000 barrels-per-day throughput decline. Throughput
decline negatively impacted the third quarter 2012 by approximately $25 million
while lower by-products values, such as petroleum coke and various natural gas
based products, had a negative impact of approximately $90 million. The refining
segment also benefitted from $24 million of restitution in the third quarter 2012
related to a former employee's fraudulent activities.
Technology - The principal products of the Technology segment include polyolefin
catalysts and production process technology licenses and related services.
Table 7 - Technology Financial Overview
Three Months EndedNine Months Ended
September 30, June 30, September 30, September 30,
Millions of U.S. dollars 20122012201120122011
Operating income$31$30$7$99$96
EBITDA484945154178
Three months ended September 30, 2012 versus three months ended June 30, 2012 -
Results were relatively unchanged.
Three months ended September 30, 2012 versus three months ended September 30,
2011 - Results were relatively unchanged.
Liquidity
Company liquidity, defined as cash and cash equivalents plus funds available
through established lines of credit, was approximately $6.8 billion on Sept. 30,
2012. The company's cash balance was approximately $3.5 billion on Sept. 30,
2012.
Capital Spending
Capital expenditures, including maintenance turnarounds, catalyst and information
technology-related expenditures, were $267 million in the third quarter 2012.
CONFERENCE CALL
LyondellBasell will host a conference call and webcast to discuss these results
today at 11 a.m. ET. Participating on the call will be Chief Executive Officer
Jim Gallogly, Executive Vice President and Chief Financial Officer Karyn Ovelmen,
Senior Vice President of Strategic Planning and Transactions Sergey Vasnetsov,
and Vice President of Investor Relations Doug Pike.
The toll-free dial-in number in the U.S. is 800-369-1609. For international
numbers, please go to the company website,
lyondellbasell.com, for a complete listing of toll-free
numbers by country. The pass code for all numbers is 4807902.
A replay of the call will be available from 2 p.m. ET Oct. 26 until 11 p.m. ET on
Nov. 26. The replay dial-in numbers are 800-839-5569 (U.S.) and +1 402-998-1150
(international). The pass code for each is 9511. The slides that accompany the
call will be available at lyondellbasell.com. |
