Chemicals and polymers maker LyondellBasell Industries (LYB) saw lower profits in the fourth quarter of 2014, hit by a hefty inventory-related charge. It recorded earnings from continuing operations of $1.57 per share for the quarter, a nearly 26% fall from $2.11 per share registered a year ago.
Barring a charge of $455 million (post-tax) associated with inventory adjustments, earnings from continuing operations were $2.48 per share for the reported quarter. That topped the Zacks Consensus Estimate of $2.13.
Consolidated profit dropped around 33% year over year to $791 million or $1.54 per share in the quarter on lower sales.
For 2014, adjusted earnings from continuing operations of $8.92 per share beat the Zacks Consensus Estimate of $8.48.
LyondellBasell recorded revenues of $10,290 million in the reported quarter, down around 8% year over year. Sales were below the Zacks Consensus Estimate of $10,842 million.
Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) fell around 9% year over year to $1,406 million. Healthy gains in the company’s olefins and polyolefins businesses were offset by declines in other divisions.
For the full year, revenues rose 3.5% year over year to $45,608 million, but trailed the Zacks Consensus Estimate of $46,419 million.
Segment Review
Revenues from the Olefins & Polyolefins – Americas division rose roughly 3% year over year to $3,379 million in the reported quarter. EBITDA jumped roughly 18% year over year to $1,040 million, benefiting from healthy olefin results. The results were driven by higher margins and increased volume from the added La Porte capacity. The company also saw higher polyethylene volumes.
Sales from the Olefins & Polyolefins – Europe, Asia, International segment went down 6% year over year to $3,361 million. EBITDA soared three-fold year over year to $348 million. Increased margins from reduced naphtha feedstock costs contributed to improved olefin results. The company saw higher ethylene production volumes on solid polymer demand. Increased volumes and margins also boosted polyolefin results.
Intermediates and Derivatives segment sales fell around 9% to $2,304 million in the reported quarter. EBITDA also slipped 23% year over year to $271 million, affected by the inventory adjustment charge.
Revenues from the Refining segment slipped 14% to $2,558 million. EBITDA was negative $311 million compared with earnings of $134 million recorded year ago. Renewable Identification Numbers (RINs) costs to meet U.S. renewable fuel standards rose around $15 million from the year-ago quarter.
Technology segment sales slid around 23% year over year to $110 million. EBITDA fell 20% year over year to $44 million on reduced licensing revenues.
Financials
LyondellBasell exited 2014 with cash and cash equivalents of roughly $1,031 million, down 77% year over year. Long-term debt rose 17% year over year to $6,757 million.
LyondellBasell bought back 17.2 million shares in the reported quarter and around 63 million shares in 2014. The company spent $7.2 billion on dividends and shares repurchases last year. Capital spending was $1.5 billion in 2014 including $403 million in the reported quarter.
Outlook
Moving ahead, LyondellBasell said that it intends to advance roughly 1 billion pounds of ethylene expansion projects during 2015 and improve operations at its methanol facility. The company also expects that its refinery will start receiving additional volumes of Canadian crude oil this year.
The company, however, expects reduced margins in 2015 compared with the last year due to lower crude oil prices. Nevertheless, the company remains confident in the fundamentals supporting its business.
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage. The company completed the 800-million pound per year ethylene expansion at its La Porte facility in Texas last year. The company’s multi-plant ethylene expansion program represents a total investment of roughly $1.3 billion across its Channelview, La Porte and Corpus Christi facilities in Texas.
LyondellBasell is a Zacks Rank #5 (Strong Sell) stock.
Better-ranked stocks in the chemicals space include Compass Minerals International Inc. (CMP), Innophos Holdings Inc. (IPHS) and Olin Corp. (OLN), all of which carry a Zacks Rank #1 (Strong Buy).
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