LyondellBasell Industries N.V. LYB received a green light from its shareholders for a new share repurchase program, wherein the company can repurchase up to 10% of its shares. The repurchases will be executed over the next 18 months from time to time through open market or privately negotiated transactions.
The company noted that the share repurchase program may be suspended or discontinued at any time. Also, it does not obligate LyondellBasell to acquire any particular amount of shares.
LyondellBasell had returned more than $29 billion to shareholders through dividend payments and share repurchases over the past seven years. The company remains committed to deliver greater value to its shareholders, leveraging healthy cash flow. It bought back 10 million shares in 2017, returning $866 million to its shareholders.
In a year, the company’s shares have moved up 43.4% compared with the industry’s growth of 11.3%.
The company sees seasonal margin improvements in oxyfuels and refining. It also expects to benefit from continued high operating rates in the second quarter. Per management, the imbalance between ethylene production and consumption is expected to improve as the downstream derivative units attain full operating rates. The company also noted that strong global demand and higher oil prices continue to support strong polyolefin pricing.
LyondellBasell remains on track with the construction of an HDPE plant on the U.S. Gulf Coast that will employ its proprietary Hyperzone PE technology. The company’s planned buyout of A. Schulman for $2.25 billion will also double the size of its existing compounding business and create a platform for future growth with reach into additional high-growth markets, such as packaging and consumer products, electronics and appliances, building and construction, and agriculture.
However, interruptions, including maintenance outages, have been hurting the company’s production capacity and results. The company is also hurt by weak ethylene prices that continue to weigh on its U.S. olefin margins. Moreover, LyondellBasell is facing headwinds related to volatility in raw material and energy costs that account for a major portion of its operating costs.
LyondellBasell Industries N.V. Price and Consensus
Zacks Rank & Stocks to Consider
LyondellBasell is a Zacks Rank #3 (Hold) stock.
Some better-ranked companies in the basic materials space are FMC Corp. FMC, Celanese Corp. CE and Koninklijke DSM NV RDSMY. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FMC Corp has an expected long-term earnings growth rate of 16.4%. Its shares have gained around 16.4% over a year.
Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have moved up around 32.7% over a year.
Koninklijke DSM has an expected long-term earnings growth rate of 7.7%. Its shares have gained around 36.6% over a year.
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