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LyondellBasell Beats 1Q18 Revenue and Earnings Estimates

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LyondellBasell’s 1Q18 revenue

LyondellBasell (LYB) reported revenues of 9.77 billion for 1Q18 today, reflecting growth of 15.9% year-over-year. LYB reported revenues of $8.43 billion in 1Q17. The company beat Wall Street analysts’ estimates of ~9.4 billion. LYB’s revenue growth was driven by higher volumes and improved prices. With the exception of the technology segment, all other reporting segments’ revenues grew.

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1Q18 adjusted EPS

LYB reported adjusted earnings per share of $3.11, an increase of 57.1% on a year-over-year basis. In 1Q17, LYB reported adjusted EPS of $1.98. It beat Wall Street estimates of $2.74. The earnings growth was primarily driven by higher revenue growth, better operating expenses as a percentage of sales, and share buybacks. LYB’s cost of goods sold as a percentage of sales gained 90 basis points year-over-year while selling, general, and administrative expenses remained more or less the same. Plus, in 1Q18, LYB bought back 1.3 million common outstanding shares.

Outlook and stock price reaction

Global demand is expected to continue to drive growth. Higher oil prices should help increase prices for polyolefins. Plus, the acquisition of A. Schulman (SHLM) is expected to be completed by the end of 2Q18. Also, LYB’s expansion plan is on track, suggesting that the future growth is intact.

However, LYB is trading 0.9% down while peers Eastman Chemical (EMN) and Celanese (CE) are trading  2.4% and 1.3% down, respectively.

Investors can indirectly access LyondellBasell by investing in the Vanguard Materials ETF (VAW), which invests 4.0% of its portfolio in LyondellBasell as of April 26.

Very soon, we’ll publish a detailed series on LyondellBasell’s 1Q18 earnings. Stay tuned!

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