On Jun 25, we issued an updated research report on Netherlands-based chemical giant, LyondellBasell Industries LYB.
LyondellBasell’s profit shot up year over year in the first quarter of 2015, reported on Apr 24, supported by higher margins in its olefins and polyolefins business in the Americas and lower raw material costs. Adjusted earnings outstripped the Zacks Consensus Estimate. However, revenues fell year over year as lower oil prices affected the prices of the company’s products. The company remains confident in the fundamentals supporting its business.
LyondellBasell remains on track with its multi-plant ethylene expansion programs across Channelview, La Porte and Corpus Christi facilities in Texas which benefit from shale gas production.
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage. The company plans to advance roughly 1 billion pounds of ethylene expansion projects during 2015 and improve operations at its methanol facility.
LyondellBasell has already completed an 800 million pound per year expansion at its La Porte site and expects the addition of 800 million pounds of capacity at the Corpus Christi plant to complete by second-quarter 2016. Expansion at the Channelview facility is also expected to come on stream in second-quarter 2015.
The company is also expected to commence further expansion at Channelview in 2017 which would add ethylene capacity of up to 550 million pounds a year. The expansion program, when in full swing, is expected to expand annual ethylene capacity by as much as 2.3-2.4 billion pounds in North America.
LyondellBasell also remains committed to deliver greater value to its shareholders leveraging healthy cash flows. The company’s board, in May 2015, approved an 11% hike in its quarterly dividend to 78 cents per share ($3.12 per share on an annualized basis).
Moreover, LyondellBasell’s major shareholders cleared a new share buyback program, authorizing it to repurchase up to 10% of its shares. The company has returned roughly $17.2 billion to its shareholders through dividends and share repurchases since Jan 2011.
LyondellBasell is a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other companies in the chemical space worth considering include Trecora Resources TREC, Stepan Company SCL and Arkema S.A. ARKAY, all with a Zacks Rank #1.
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