uploads///LYB Part  Q Earnings

Why Did LyondellBasell’s 3Q16 Earnings Miss Estimates?

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Dec. 4 2020, Updated 10:53 a.m. ET

LyondellBasell’s 3Q16 earnings

LyondellBasell (LYB) reported adjusted EPS (earnings per share) of $2.31 in 3Q16 compared to $2.80 in 3Q15, implying a fall of 17.5% in its adjusted EPS on a year-over-year basis. LyondellBasell missed Wall Street analysts’ estimate of adjusted EPS of $2.33.

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Adjusted net profit margin

LyondellBasell reported an adjusted net profit margin of 13.0% in 3Q16 compared to 14.2% in 3Q15, implying a fall of 120 basis points (or bps) in its adjusted net profit on a year-over-year basis. Analysts expected LyondellBasell to post an adjusted net profit margin of 12.9% in 3Q16.

Driving factors

LyondellBasell’s EPS were lowered primarily due to significant planned maintenance in its North American Olefins & Polyolefins business. Further, its refining segment was impacted by scheduled maintenance. On the other hand, its earnings were helped by a better performance in its European Olefins & Polyolefins business. Also during 3Q16, LyondellBasell bought back 10.3 million shares, boosting its adjusted EPS.

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Bob Patel, LyondellBasell’s CEO, mentioned that the company is on track to achieve adjusted EPS of above $9.00 for 2016. He also said that 2016 has witnessed an unusually high maintenance turnaround. He expects the company’s 2017 planned maintenance to be very low, and he believes LyondellBasell to be well positioned to reap the benefits.

ETF investment

Investors can indirectly hold LyondellBasell by investing in the iShares U.S. Basic Materials ETF (IYM), which has invested 2.0% of its holdings in LyondellBasell as of November 1, 2016. The top holdings of this fund include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON) with weights of 11.4%, 11.3%, and 8.3%, respectively, as of November 1, 2016. In the next article, we’ll analyze the performance of LyondellBasell’s Olefins & Polyolefins Americas segment in 3Q16.

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