LyondellBasell Beats On Q2, Provides Optimistic Margin Guidance For Q3 Amid Favorable Cost Conditions

LyondellBasell Industries N.V. LYB reported second-quarter fiscal 2024 revenues of $10.55 billion, up from $10.306 billion a year ago, beating the consensus of $10.44 billion.

Adjusted EBITDA stood at $1.37 billion (-5.3% Y/Y), and the margin contracted by 107 bps to 13%. Adjusted EPS stood at $2.24, beating the consensus of $2.23.

Second-quarter volumes saw a boost from higher production and improving seasonal demand. In North America, olefins and polyolefins volumes rose, supported by favorable ethane and natural gas costs that bolstered integrated margins.

In Europe, integrated polyethylene margins grew due to the increased use of advantaged LPG feedstocks.

“Increased production from LYB’s assets, higher integrated margins, and rising seasonal demand drove sequential improvements in second quarter profitability.  Underlying business results increased by nearly 30 percent over the first quarter.  We continue to make significant strides on our ambitions to grow and upgrade our core businesses as part of our three-pillar strategy to unlock value,” commented Peter Vanacker, LyondellBasell’s chief executive officer.

The company’s strong cash conversion resulted in $1.3 billion in cash from operating activities. The company invested $484 million in capital expenditures and returned $513 million to shareholders through dividends and share repurchases. 

LYB held $2.9 billion in cash and short-term investments and $7.0 billion in available liquidity at the end of the quarter.

The company divested the EO&D business for $700 million while investing ~$500 million to acquire a 35% stake in the feedstock-advantaged NATPET joint venture in Saudi Arabia.

Q3 Outlook: The company expects margins to continue to benefit from low costs for natural gas and natural gas liquids utilized in LYB’s North American and Middle East production relative to higher oil-based costs in most other regions.

LYB expects to operate its assets in line with market demand with average operating rates of 85% for North American olefins and polyolefins (O&P) assets, 80% for European O&P assets, and 75% for Intermediates & Derivatives assets. 

Price Action: LYB shares traded lower by 2.18% at $96.14 at the last check Friday.