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LyondellBasell Stock Fell despite Rise in 4Q17 Earnings

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Feb. 7 2018, Published 8:17 a.m. ET

LyondellBasell’s 4Q17 earnings

LyondellBasell (LYB) announced its 4Q17 earnings on February 2, 2018, and reported adjusted EPS (earnings per share) of $2.73 compared with analysts’ estimate of $2.55. The reported EPS rose 25.2% on a year-over-year basis. The figure excludes a tax benefit of $2.07 per share due to US tax reforms.

LYB’s earnings per share benefited from share repurchases. At the end of 4Q17, LYB’s outstanding shares stood at 395 million as compared to approximately 395.9 million shares at the end of 3Q17.

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Further, LYB’s EPS growth was influenced by higher revenue growth and a reduction in operating expenses as a percentage of sales. In 4Q17, LYB reported its cost of goods sold (or COGS) at $7.5 billion, which represented 82.4% of its sales. In 4Q16, COGS stood at 82.9% of sales, implying a gain of 50 basis points on a year-over-year basis. Similarly, LYB’s selling, general, and administrative expenses were reported as 2.6% of the sales in 4Q17 as compared to approximately 3.3% of the sales in 4Q16, which represents a gain of 70 basis points on a year-over-year basis.

Stock price reaction

Although LyondellBasell’s 4Q17 earnings beat analyst estimates, the global sell-off pushed the stock down. LYB stock fell ~4.6% and closed at $112.17 on February 2, 2018. On the same day, peers Eastman Chemical (EMN) gained ~0.90%, while Olin (OLN) and Westlake Chemical (WLK) fell 2.4% and 4.1%, respectively.

Investors can invest in LyondellBasell indirectly through the iShares US Basic Materials ETF (IYM). IYM invests 5.1% of its portfolio in LyondellBasell as of February 3, 2018.

In the next part, we’ll discuss LyondellBasell’s revenues in 4Q17.

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