LyondellBasell Reports Second-Quarter 2013 Results

HOUSTON and LONDON, July 26, 2013 /PRNewswire/ --

Second-Quarter 2013 Highlights

• Record diluted earnings per share of $1.60; $923 million income from continuing operations
• EBITDA of $1,652 million; strong olefins results continue
• Increased interim quarterly dividend by 25% to $0.50 per share
• Repurchased approximately 5.4 million shares during the quarter
• Credit rating upgraded by Moody's

LyondellBasell Industries (NYSE: LYB) today announced earnings from continuing operations for the second quarter 2013 of $1.60 diluted earnings per share or $923 million. Second quarter 2013 EBITDA was $1,652 million. The increase was primarily due to improved operating results in the olefins and polyolefins segments.

Comparisons with the prior quarter and second quarter 2012 are shown below:

Results also reflect the following charges and benefits:

"Overall, it was a strong quarter. We achieved record quarterly earnings and advanced our plans for the future on several fronts. The back-to-basics strategy that we put in place three years ago continues to yield strong results and returns for our shareholders. This was particularly evident in both our U.S. and European olefins businesses. In both regions, our plants ran well above average industry operating rates while also utilizing additional advantaged natural gas liquid feedstocks," said Jim Gallogly, LyondellBasell Chief Executive Officer. 

"We continue to invest in our assets, completing turnarounds at one propylene oxide plant in the U.S. and another in Europe and concluding the butadiene expansion at Wesseling, Germany during the second quarter. Our well positioned assets and strong operations enabled us to increase our dividend and initiate a share repurchase program. During the latter part of the quarter, we purchased almost one percent of our outstanding shares and increased our dividend by 25 percent to 50 cents per share," Gallogly said.

OUTLOOK

"Industry conditions in the U.S. are relatively unchanged from the first half of the year. Our integrated assets and diversified portfolio of U.S. olefins and Intermediates and Derivatives businesses remain very profitable. In Europe, the market continues to seek equilibrium in a slow economy, and we have seen rising naphtha prices. Refining has been a challenging industry and continues to evolve. We believe that these market conditions coupled with an imbalance within renewable fuel requirements will continue to pressure our near term results. Our path and strategy remain unchanged, and LyondellBasell is well-positioned to continue generating strong results and rewarding our shareholders," Gallogly said.

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

LyondellBasell operates in five business segments: 1) Olefins and Polyolefins – Americas; 2) Olefins and Polyolefins – EAI; 3) Intermediates and Derivatives; 4) Refining; and 5) Technology.

Olefins and Polyolefins - Americas (O&P-Americas)– The primary products of this segment include ethylene and its co-products (propylene, butadiene and benzene), polyethylene, polypropylene and Catalloy process resins. 

Three months ended June 30, 2013 versus three months ended March 31, 2013  – The segment achieved record EBITDA results in the second quarter of 2013. EBITDA increased $53 million versus the first quarter 2013. Compared to the prior period, olefins results decreased approximately $30 million primarily due to lower margins, driven by a 2 cents per pound lower average ethylene price and lower co-product values, which more than offset higher ethylene sales volumes. Combined polyolefin results increased by approximately $70 million from the first quarter 2013 driven by higher margins and a 13 percent increase in polypropylene sales volumes. Joint venture equity income increased by $4 million.

Three months ended June 30, 2013 versus three months ended June 30, 2012 – EBITDA increased $170 million in the second quarter 2013 versus the second quarter 2012. Excluding the impact of a $71 million lower of cost or market adjustment and a $29 million insurance settlement in the second quarter 2012, EBITDA increased $128 million. Olefins results increased approximately $95 million compared to the prior year period as a result of higher olefins volumes. Olefins production volumes were higher compared to the second quarter 2012, which was impacted by a planned maintenance turnaround. The price of ethylene increased by approximately 1 cent per pound compared to the prior year period. Polyethylene results improved by approximately $10 million as sales volumes increased 5 percent versus the prior year period. Polypropylene results declined by approximately $30 million due to a decline in spread of 2 cents per pound. Joint venture equity income increased by $4 million.

Olefins and Polyolefins - Europe, Asia, International (O&P-EAI)– The primary products of this segment include ethylene and its co-products (propylene and butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy process resins and polybutene-1 resins.

Three months ended June 30, 2013 versus three months ended March 31, 2013 – EBITDA increased $70 million in the second quarter 2013 versus the first quarter 2013. Olefins results improved approximately $50 million primarily due to olefin margins expansion related to increased liquefied petroleum gas (LPG) feedstock cracking, naphtha price volatility, and increased production rates. Combined polyolefin results increased by approximately $10 million, driven by an approximately 10 percent increase in sales volumes. Polypropylene compounds and polybutene-1 results increased by approximately $30 million as a result of margin expansion, primarily due to lower raw materials prices and higher sales volume. Equity income from joint ventures decreased by $23 million from the first quarter 2013.

Three months ended June 30, 2013 versus three months ended June 30, 2012 – EBITDA declined $10 million versus the second quarter 2012. Olefins results declined by approximately $65 million, primarily as a result of lower butadiene margins. Combined polyolefin results increased by approximately $15 million primarily as a result of a 22 percent increase in sales volumes in the second quarter 2013. Polypropylene compounds and polybutene-1 results increased by approximately $25 million from the prior year period as a result of higher polypropylene compounds margins. Equity income from joint ventures was relatively unchanged from the second quarter 2012.

Intermediates and Derivatives (I&D)– The primary products of this segment include propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl alcohol (TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives (propylene glycol, propylene glycol ethers and butanediol), acetyls, ethylene oxide and its derivatives, and oxyfuels.  

Three months ended June 30, 2013 versus three months ended March 31, 2013 – EBITDA decreased $35 million versus the first quarter 2013.  Plant turnarounds negatively impacted segment results by approximately $30 million. Including turnaround impacts, results for PO and PO derivatives decreased by approximately $50 million. Competitive pressure reduced butanediol margins while volumes declined seasonally on lower sales into aircraft deicing. Intermediate chemicals results were relatively unchanged as higher acetyls and ethylene glycol volumes offset lower results in styrene and C4 chemicals. Oxyfuels results improved by approximately $15 million due to higher second quarter 2013 volumes. Equity income from joint ventures was relatively unchanged.

Three months ended June 30, 2013 versus three months ended June 30, 2012 – EBITDA decreased $94 million compared to the second quarter 2012. Excluding the second quarter 2012 benefit of an $18 million insurance settlement, EBITDA decreased $76 million. Results for PO and PO derivatives declined by approximately $70 million primarily due to higher costs related to 2013 turnarounds and lower butanediol margins. Merchant PO volumes and margins were relatively unchanged. Intermediate chemicals results were relatively unchanged as higher acetyls and ethylene glycol volumes were offset by lower C4 chemical volumes due to plant turnarounds. Oxyfuels results declined by approximately $20 million as a result of lower margins which more than offset higher sales volumes in the 2013 period. Equity income from joint ventures increased by $10 million from the second quarter in 2012. 

Refining – The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.

Three months ended June 30, 2013 versus three months ended March 31, 2013 – EBITDA was relatively unchanged versus the first quarter 2013. Our refinery operated at 265,000 barrels per day, up 92,000 barrels per day from the prior quarter when the refinery completed a scheduled maintenance turnaround. The volume improvement was offset by the increased cost of renewable fuel standard requirements and a decline in margins in the second quarter 2013. Compared to the prior quarter, the Maya 2-1-1 benchmark crack spread declined by $2.48 per barrel, averaging $18.49 per barrel. The cost of Renewable Identification Numbers (RINs) to meet U.S. renewable fuel standards increased by $22 million versus the first quarter 2013.

Three months ended June 30, 2013 versus three months ended June 30, 2012 – EBITDA decreased $140 million versus the second quarter 2012. Excluding the second quarter 2012 benefit of a $53 million insurance settlement, EBITDA decreased by $87 million. Our refinery operated at 265,000 barrels per day, down 2,000 barrels per day from the prior year period. Compared to the second quarter 2012, the decline in Maya 2-1-1 benchmark spread of $4.67 per barrel and higher natural gas cost negatively impacted results. The cost of RINs increased by $38 million compared to the same quarter last year.

Technology – The principal products of the Technology segment include polyolefin catalysts and production process technology licenses and related services.

Three months ended June 30, 2013 versus three months ended March 31, 2013 – EBITDA decreased by $7 million primarily as a result of lower licensing revenues.

Three months ended June 30, 2013 versus three months ended June 30, 2012 – EBITDA increased by $9 million led by higher catalyst and licensing revenues.

Capital spending and cash balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology related expenditures, were $387 million in the second quarter 2013. Our cash balance was $3.2 billion at June 30, 2013. We repurchased 5.4 million of our outstanding ordinary shares and paid $261 million in dividends during the second quarter of 2013. In early third quarter 2013, we issued 10-year and 30-year bonds with an aggregate principal amount of $1.5 billion for which we received proceeds of approximately $1.45 billion after deducting underwriting discounts and offering expenses.

CONFERENCE CALL

LyondellBasell will host a conference call July 26 at 11 a.m. ET.  Participants on the call will include Chief Executive Officer Jim Gallogly, Executive Vice President and Chief Financial Officer Karyn Ovelmen, Senior Vice President - Strategic Planning and Transactions Sergey Vasnetsov, and Vice President of Investor Relations Doug Pike. 

The toll-free dial-in number in the U.S. is 877-950-3594. For international numbers, go to www.lyondellbasell.com/teleconference, for a complete listing of toll-free numbers by country. The pass code for all numbers is 1231245.

A replay of the call will be available from 2 p.m. ETJuly 26 until Aug. 26 at 11 p.m. ET.  The replay dial-in numbers are 866-460-9739 (U.S.) and +1 203-369-1347 (international). The pass code for each is 2323.

The slides that accompany the call will be available at http://www.lyondellbasell.com/earnings.

ABOUT LYONDELLBASELL

LyondellBasell (NYSE: LYB) is one of the world's largest plastics, chemical and refining companies and a member of the S&P 500. LyondellBasell (www.lyondellbasell.com) manufactures products at 58 sites in 18 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels. 

FORWARD-LOOKING STATEMENTS

The statements in this release and the related teleconference relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual results could differ materially based on factors including, but not limited to, the business cyclicality of the chemical, polymers and refining industries; the availability, cost and price volatility of raw materials and utilities, particularly the cost of oil, natural gas, and associated natural gas liquids; competitive product and pricing pressures; labor conditions; our ability to attract and retain key personnel; operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental risks); the supply/demand balances for our and our joint ventures' products, and the related effects of industry production capacities and operating rates; our ability to achieve expected cost savings and other synergies; legal and environmental proceedings; tax rulings, consequences or proceedings; technological developments, and our ability to develop new products and process technologies; potential governmental regulatory actions; political unrest and terrorist acts; risks and uncertainties posed by international operations, including foreign currency fluctuations; and our ability to comply with debt covenants and service our debt.  Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the "Risk Factors" section of our Form 10-K for the year ended December 31, 2012, which can be found at www.lyondellbasell.com on the Investor Relations page and on the Securities and Exchange Commission's website at www.sec.gov.

NON-GAAP MEASURES

This release makes reference to certain "non-GAAP" financial measures, such as EBITDA, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended.  We report our financial results in accordance with U.S. generally accepted accounting principles, but believe that certain non-GAAP financial measures, such as EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of the company's ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.

EBITDA, as presented herein, may not be comparable to a similarly titled measure reported by other companies due to differences in the way the measure is calculated. We calculate EBITDA as income from continuing operations plus interest expense (net), provision for (benefit from) income taxes, and depreciation & amortization.  EBITDA should not be considered an alternative to profit or operating profit for any period as an indicator of our performance, or as alternative to operating cash flows as a measure of our liquidity.

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 9 at the end of this release.

OTHER FINANCIAL MEASURE PRESENTATION NOTES

This release contains time sensitive information that is accurate only as of the time hereof. Information contained in this release is unaudited and subject to change. LyondellBasell undertakes no obligation to update the information presented herein except to the extent required by law.