LyondellBasell Reports Mixed Q4 Results, Warns On Headwinds From Slow Demand

LyondellBasell Industries N.V. LYB reported the fourth-quarter fiscal 2023 revenues of $9.93 billion, down from $10.21 billion a year ago, beating the consensus of $9.84 billion.

Adjusted EBITDA stood at $910 million (+5.2% Y/Y), and margin expanded by 70 bps to 9.2%. Adjusted EPS stood at $1.26, missing the consensus of $1.31.

LyondellBasell generated $1.5 billion of cash from operating activities, resulting in 171% cash conversion for the quarter. LYB returned $406 million in dividends to shareholders in Q4.

“During the fourth quarter, LyondellBasell’s businesses delivered exceptional cash conversion amid challenging market conditions while we rapidly moved forward with our strategy. We have a clear and focused roadmap to deliver a more profitable and sustainable growth engine for LYB,” commented LYB Chief Executive Officer Peter Vanacker.

“In the fourth quarter, we announced the divestiture of our Ethylene Oxide and Derivatives business and our decision to build the first catalytic advanced recycling plant using LYB’s proprietary MoReTec technology. And just two weeks ago, we announced a new propylene and polypropylene joint venture in Saudi Arabia,” added Vanacker.

LYB’s cash and liquid investment balance was $3.4 billion as of December 31, 2023.

The company stated that significantly lower fourth-quarter gasoline crack spreads impacted refining and oxyfuels margins and the value of co-product fuels in the Olefins & Polyolefins Americas segment.

Outlook: LyondellBasell anticipates continued challenges in the first quarter of 2024 from seasonally slow demand and economic uncertainty. The company expects low ethane costs to benefit North American Olefins & Polyolefins margins; modest regional demand improvement is expected.

The company expects oxyfuels and refining margins to be within typical winter seasonal ranges.

LYB stated that China demand was subdued in January due to Lunar New Year inventory adjustments; the growth outlook is uncertain. Spring and summer seasonal demand improvements are expected across global markets.  

Operating Rates: LyondellBasell plans to adjust first quarter operating rates to global demand—Olefins & Polyolefins Americas at ~80%, Olefins & Polyolefins EAI and Intermediates & Derivatives at ~75%.

Price Action: LYB shares traded lower by 2.65% at $92.11 on the last check Friday.