Can LyondellBasell (LYB) Sustain Earnings Streak In Q4?
Zacks Investment Research | Jan 30, 2019 07:53AM ET
LyondellBasell Industries (NYSE:LYB) is set to release fourth-quarter 2018 results before the opening bell on Feb 1.
In the last reported quarter, the company’s profits rose roughly 5% year over year to $1,113 million or $2.85 per share. Adjusted earnings came in at $2.96 per share, which surpassed the Zacks Consensus Estimate of $2.73, translating into a positive earnings surprise of 10.8%.
Revenues went up roughly 19% year over year of $10,155 million. It also beat the Zacks Consensus Estimate of $9,564 million.
Notably, LyondellBasell surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 10.8%.
The company’s shares have lost 26.7% in the past year, underperforming the industry ’s 23% decline.
Can the company surprise investors again or is it heading for a pullback? Let’s see how things are shaping up for this announcement.
Factors to Consider
LyondellBasell, in its third-quarter call, stated that it expects to drive operational and business improvements in Refining, Technology as well as Intermediates and Derivatives businesses in the fourth quarter. The company is poised to benefit from increased access to markets, incremental synergies from the integration of A. Schulman acquisition and formation of the Advanced Polymer Solutions segment.
The Zacks Consensus Estimate for total fourth-quarter revenues is pegged at $9,222 million, reflecting year-over-year growth of 1%.
At the company's Olefins & Polyolefins – Americas segment, revenues are expected to rise 2% from the year-ago quarter as the Zacks Consensus Estimate is currently pegged at $2,857 million.
Revenues from the Olefins & Polyolefins – Europe, Asia, International division are likely to decline 10% year over year as the Zacks Consensus Estimate stands at $2,772 million.
Revenues for LyondellBasell’s Intermediates and Derivatives segment is projected to rise 1.1% from the prior-year quarter’s tally as the Zacks Consensus Estimate is pegged at $2,256 million.
The Zacks Consensus Estimate for revenues at the Refining segment is pegged at $1,863 million, reflecting a 11.8% decrease on a year-over-year basis.
The Technology segment sales are expected to fall 4.8% year over year in the to-be-reported quarter as the Zacks Consensus Estimate is pinned at $119 million.
Get The News You Want
LyondellBasell is executing its expansion projects to leverage the U.S. natural gas liquids advantage. The company’s operational improvement initiatives are expected to drive earnings in the December quarter. Continued strong demand is also expected to support results in the Olefins & Polyolefins – Americas segment.
The buyout of A. Schulman is also expected to create significant synergies. The buyout doubles the size of LyondellBasell's existing compounding business. The company is making progress with the integration of the acquisition and expects to realize $32 million in annual run-rate synergies.
However, LyondellBasell’s operations are subject to maintenance outages, which are affecting results. The company expects roughly $25-million impact from downtime associated with planned maintenance at its German cracker in the fourth quarter at its Olefins & Polyolefins – Europe, Asia, International segment. This may impact volumes at the segment.
Moreover, maintenance at one of LyondellBasell’s propylene oxide plants in Texas reduced EBITDA by roughly $20 million in the third quarter at the Intermediates and Derivatives unit and is expected to lower margins by roughly $25 million in the fourth quarter.
Planned maintenance at the company’s refinery also impacted EBITDA by around $20 million in the third quarter and is expected to hurt margins by $45 million in the fourth quarter.
The company is also seeing a rise in feedstock costs, which is hurting margins in the Olefins & Polyolefins – Europe, Asia, International division. Moreover, LyondellBasell faces challenges in the European markets for polymers with sluggish demand growth and ample supply. It expects market pressure to continue in the fourth quarter along with a lower demand due to typical seasonal effects.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.