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Why LyondellBasell's 3Q17 Results Look Like a Mixed Bag

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Why LyondellBasell's 3Q17 Results Look Like a Mixed Bag PART 1 OF 7

LyondellBasell Misses Earnings Estimate, Stock Price Falls

LyondellBasell’s 3Q17 earnings

LyondellBasell (LYB) announced its 3Q17 earnings on October 27, 2017, reporting adjusted EPS (earnings per share) of $2.41, compared with the analysts’ estimate of $2.43. On a continuing operation basis, LYB reported earnings per share of $2.67, representing a rise of 15.6% on a YoY (year-over-year) basis.

The reported EPS include a gain of $0.26 per share from the sale of LYB’s interest in Geosel Pipeline and storage system in France.

LyondellBasell Misses Earnings Estimate, Stock Price Falls

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LYB’s earnings benefitted from the share repurchases. During 3Q17, LYB bought back 3.1 million shares. As a result, the number of shares outstanding at the end of 3Q17 stood at 394.45 million shares, compared with 409 million in 3Q16.

However, LYB’s EPS was adversely impacted by an increase in COGS (cost of goods sold) as a percentage of sales. In 3Q17, LYB’s COGS was $6.94 billion, representing 81.5% of the sales, compared with 80.1% of total sales in 3Q16—a rise of 140 basis points YoY.

Stock price reaction

LyondellBasell’s 3Q17 earnings miss caused the stock to fall ~2.2%. LyondellBasell closed at $99.01 on October 27, 2017. On the same day, peers Eastman Chemical (EMN) and Olin (OLN) gained ~2.2% and ~0.10%, respectively, while Westlake Chemical (WLK) fell ~0.30%.

Notably, investors can invest in LyondellBasell indirectly by investing in the iShares US Basic Materials ETF (IYM). IYM has invested 4.9% of its portfolio in LyondellBasell as of October 27.

In the next part, we’ll discuss LyondellBasell’s revenues in 3Q17.

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