uploads///Revenues Q LYB earnings

LyondellBasell’s 1Q18 Revenue Was Its Best since 4Q14

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May. 1 2018, Published 2:28 p.m. ET

LyondellBasell’s 1Q18 revenue

For 1Q18, LyondellBasell (LYB) reported revenue of $9.8 billion, an increase of 15.9% on a YoY (year-over-year) basis. In 1Q17, its revenue totaled $8.4 billion. 

In the quarter, LYB exceeded analysts’ expectation of $9.4 billion and posted its highest quarterly revenue since 4Q14.

LYB’s strong revenue growth was primarily driven by a combination of higher price realizations, higher volume growth, and favorable foreign currency. With the exception of the Technology segment, all of LYB’s reporting segments witnessed growth. The Refining segment once again outshined the other segments and saw staggering revenue growth of 67%. We’ll discuss each of the company’s reporting segments in detail in later articles.

In terms of contributions, higher prices contributed 7% to LYB’s revenue growth, overall volumes growth boosted LYB’s revenue by 3%, and continued weakness in the US dollar resulted in revenue growth of 6%.

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Outlook

Higher oil prices will likely continue the upward revenue growth trend. LYB and Suez, which bought a 50% stake in Quality Circular Polymers, a Netherlands-based company, have begun operations. In addition, LYB is set to complete the acquisition of A. Schulman (SHLM) by the end of 2Q18, which should help it to grow further. Also, LYB’s expansion plan of its Hyperzone HDPE plant and PO/TBA projects are on track.

Management’s comments

Bob Patel, LyondellBasell’s CEO, said, “We started 2018 with strong operations, capturing higher margins for several of our products and advancing our organic and inorganic growth programs. EBITDA [earnings before interest, tax, depreciation, and amortization) improved by 11% relative to the fourth quarter and by 18% relative to the first quarter 2017. Global polyolefins demand remained solid.”

Patel continued, “While U.S. ethylene prices weakened, a tight market for polyolefins supported a polyethylene price increase and strong chain margins. Our Intermediates and Derivatives business achieved record quarterly EBITDA for the segment, driven primarily by higher margins, while our reliability initiatives at the Houston refinery resulted in strong operations during the first quarter.”

Investors can indirectly hold LYB by investing in the Materials Select Sector SPDR ETF (XLB), which invests 5.4% of its portfolio in LyondellBasell. The fund also provides exposure to Air Products and Chemicals (APD) and Eastman Chemical (EMN) with weights of 5.7% and 2.4%, respectively, as of April 27, 2018.

In the next few articles, we’ll look into the performance of LYB’s reporting segments in 1Q18.

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