LyondellBasell Reports 2016 Earnings

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HOUSTON and LONDON, Feb. 3, 2017 /PRNewswire/ --

2016 Full Year Highlights

  • Strong Earnings
    • Income from continuing operations: $3.8 billion ($3.9 billion excluding LCM1)
    • Diluted earnings per share: $9.15 per share ($9.20 per share excluding LCM)
    • EBITDA: $6.6 billion ($6.6 billion excluding LCM)
  • Advanced the Growth Program
    • Completed an 800 million pound ethylene expansion at Corpus Christi, Texas, the final in a series of planned expansions to increase our U.S. ethylene capacity by 20%
    • Began site preparations for a new 1.1 billion pound polyethylene plant in La Porte, Texas
  • Strong Cash Flow and Share Repurchases
    • Full year cash generation from operations totaled $5.6 billion
    • Share repurchases and dividends totaled $4.3 billion; $2.2 billion in capital expenditures
    • Repurchased 37 million shares or approximately 8% of the shares outstanding on January 1, 2016

Fourth Quarter 2016 Highlights

  • Income from continuing operations: $770 million ($788 million excluding LCM)
  • Diluted earnings per share: $1.89 per share ($1.94 per share excluding LCM)
  • EBITDA: $1.4 billion ($1.4 billion excluding LCM)
  • Share repurchases and dividends totaled $783 million; repurchased 5.2 million shares during the fourth quarter or approximately 1.3% of the shares outstanding on October 1, 2016

Comparisons with the prior quarter, fourth quarter 2015 and full year 2015 are available in the following table:

Table 1 - Earnings Summary








Three Months Ended

Year Ended

Millions of U.S. dollars

December 31,

September 30,

December 31,

December 31,

December 31,


(except share data)

2016

2016

2015

2016

2015

Sales and other operating revenues

$7,747

$7,365

$7,071

$29,183

$32,735

Net income(a)

763

953

795

3,837

4,474

Income from continuing operations(b)

770

955

797

3,847

4,479

Diluted earnings per share (U.S. dollars):







Net income(c)

1.87

2.30

1.78

9.13

9.59


Income from continuing operations(b)

1.89

2.31

1.78

9.15

9.60

Diluted share count (millions)

407

414

446

420

466

EBITDA(d)

1,406

1,606

1,394

6,602

7,533








Excluding LCM Impact:






LCM charges, pre-tax

29

- -

284

29

548

Income from continuing operations

788

955

982

3,865

4,830

Diluted earnings per share (U.S. dollars):







Income from continuing operations

1.94

2.31

2.20

9.20

10.35

EBITDA

1,435

1,606

1,678

6,631

8,081








(a)  Includes net loss attributable to non-controlling interests and income (loss) from discontinued operations, net of tax.  See Table 10.

(b)  See Table 11 for charges and benefits to income from continuing operations.

(c)  Includes diluted earnings per share attributable to discontinued operations.

(d)  See the end of this release for an explanation of the Company's use of EBITDA and Table 8 for reconciliations of EBITDA to net income and income from continuing operations.




1 LCM stands for "lower of cost or market."  An explanation of LCM and why we have excluded it from our financial information in this press release can be found at the end of this press release under "Information Related to Financial Measures."

 

LyondellBasell Industries LYB today announced earnings from continuing operations for the fourth quarter 2016 of $770 million, or $1.89 per share. Fourth quarter 2016 EBITDA was $1.4 billion.  The quarter included a $29 million non-cash, pre-tax charge for the impact of a lower of cost or market (LCM) inventory adjustment ($18 million after-tax).  Excluding the LCM adjustment, earnings from continuing operations during the fourth quarter totaled $788 million, or $1.94 per share, and EBITDA was $1.4 billion. The fourth quarter also included a $58 million lump sum pension settlement and a $61 million non-cash, out-of-period cumulative correction. The correction, which was not material to any reporting period, relates to taxes on our cross-currency swaps for 2014, 2015 and through the third quarter of 2016. Together, the pension settlement and the non-cash, out-of-period correction adversely impacted fourth quarter earnings by $0.24 per share. Full year 2016 income from continuing operations was $3.8 billion, or $9.15 per share, and EBITDA was $6.6 billion. The full year included a non-cash, pre-tax LCM inventory adjustment of $29 million ($18 million after tax).  Excluding the LCM adjustment, earnings from continuing operations for the full year totaled $3.9 billion, or $9.20 per share, and EBITDA was $6.6 billion.  2016 earnings were negatively impacted due to the $58 million pension settlement, a $74 million non-cash, out-of-period cumulative correction relating to 2014 and 2015 for taxes on our cross currency swaps and  positively impacted by an after tax gain of $78 million on the sale of our Argentine wholly owned subsidiary, Petroken Petroquímica Ensenada S.A. (Petroken).  Combined, the net effect of the pension settlement, non-cash, out-of-period tax correction and Petroken gain adversely impacted full year 2016 earnings by $0.07 per share. 

"LyondellBasell posted good results for 2016 despite the impact of our heavy planned maintenance schedule and several Refining operational upsets.  Our continued strong earnings and cash flow enabled us to return cash to shareholders by increasing our dividend per share by 9 percent and purchasing 8 percent of the outstanding shares.  Our Olefins and Polyolefins - Europe, Asia and International and Technology segments posted their second consecutive year of record results, demonstrating continued global industry strength.  Overall, the global olefins and polyolefins industry benefitted from continued favorable supply and demand balances while low crude oil and fuel prices adversely impacted refining and oxyfuel margins.  During the fourth quarter, we completed the final step in our 2 billion pound North American ethylene expansion program, began site preparation for a 1.1 billion pound polyethylene plant, and advanced our new propylene oxide plant design.  These projects coupled with the 2016 completion of seven major plant maintenance turnarounds, including four cracker turnarounds, position our company favorably for the coming years," said Bob Patel, LyondellBasell chief executive officer. 

OUTLOOK
"During the past several months, the industry outlook for 2017 has steadily improved.  Healthy U.S. and global economic activity and ethylene project delays have led to an improved forecast for industry supply and demand dynamics.  Global supply positions have provided optimism regarding crude oil prices and NGL supply.  While we will continue to watch these developments, the significant investments in our 2016 maintenance programs favorably position the company for 2017," Patel said. 

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
LyondellBasell manages operations through five operating segments: 1) Olefins and Polyolefins – Americas; 2) Olefins and Polyolefins – Europe, Asia and International (EAI); 3) Intermediates and Derivatives; 4) Refining; and 5) Technology. 

Comments and analysis represent underlying business activity and are exclusive of LCM inventory adjustments.

Olefins and Polyolefins - Americas (O&P-Americas) – Our O&P–Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.

Table 2 - O&P–Americas Financial Overview



Three Months Ended

Year Ended



December 31,

September 30,

December 31,

December 31,

December 31,

Millions of U.S. dollars

2016

2016

2015

2016

2015

Operating income

$458

$582

$662

$2,393

$3,256

EBITDA

563

682

775

2,877

3,661

LCM charges, pre-tax

29

- -

59

29

160

EBITDA excluding LCM adjustments

592

682

834

2,906

3,821

 

Three months ended December 31, 2016 versus three months ended September 30, 2016 – EBITDA decreased $90 million versus the third quarter 2016, excluding an unfavorable $29 million quarter to quarter variance as a result of the fourth quarter LCM inventory adjustment. The fourth quarter segment results were adversely impacted by $23 million due to the pension settlement.  Compared to the prior period, olefins results decreased approximately $80 million.  This decrease was driven by margins which declined approximately 6 cents per pound due to lower ethylene prices and increased feedstock costs.  Volumes improved as a result of the completion of planned maintenance at the Morris, Illinois complex.  Combined polyolefins results increased by approximately $10 million.  Polyethylene price spreads over ethylene improved approximately 2 cents per pound partially offset by a 2 percent volume decrease.  Polypropylene volumes declined due to seasonal demand while price spreads over propylene improved approximately 4 cents per pound.  Joint venture equity income declined by $7 million.

Three months ended December 31, 2016 versus three months ended December 31, 2015 – EBITDA decreased $242 million versus the fourth quarter 2015, excluding a favorable $30 million quarter to quarter variance as a result of the LCM inventory adjustments.  2016 results were negatively impacted by $23 million due to the pension settlement. Olefins results declined approximately $70 million versus the fourth quarter 2015.  Ethylene margins were lower and production was down 9% primarily due to scheduled maintenance.  Combined polyolefins results decreased approximately $150 million versus the very strong prior year period.  Polyethylene spreads declined by approximately 6 cents per pound and volume decreased by approximately 6 percent.  Polypropylene spreads declined by approximately 3 cents per pound.  Joint venture equity income declined by $10 million.

Full year ended December 31, 2016 versus full year ended December 31, 2015 – EBITDA decreased $915 million versus 2015, excluding a favorable $131 million year to year variance as a result of the LCM inventory adjustments in both years.  2016 results include a $57 million gain on the sale of the Petroken polypropylene business and the $23 million negative impact due to the pension settlement.  Olefins results declined by approximately $850 million from the prior year.  Ethylene margins declined by approximately 6 cents per pound versus 2015.  The impact of 2 cents per pound lower ethylene sales price was compounded by a higher cost of ethylene production.  Production was approximately 13 percent lower primarily as a result of 2016 scheduled plant maintenance.  Combined polyolefins results decreased approximately $120 million versus the prior year.  Polyethylene spreads over ethylene declined approximately 4 cents per pound and volume decreased approximately 4 percent.  Polypropylene spreads improved by approximately 4 cents per pound.  Polypropylene sales volumes were lower due to the sale of our Petroken subsidiary.  Joint venture equity income increased by $17 million versus the prior year.

Olefins and Polyolefins - Europe, Asia, International (O&P-EAI) – Our O&P–EAI segment produces and markets olefins and co-products, polyethylene and polypropylene, including polypropylene compounds.

Table 3 - O&P–EAI Financial Overview



Three Months Ended

Year Ended



December 31,

September 30,

December 31,

December 31,

December 31,

Millions of U.S. dollars

2016

2016

2015

2016

2015

Operating income

$266

$447

$302

$1,494

$1,309

EBITDA

398

584

427

2,067

1,825

LCM charges, pre-tax

- -

- -

24

- -

30

EBITDA excluding LCM adjustments

398

584

451

2,067

1,855

 

Three months ended December 31, 2016 versus three months ended September 30, 2016 – EBITDA decreased $186 million for the fourth quarter versus the third quarter 2016.  The fourth quarter was negatively impacted by a pension settlement of $8 million and the absence of an $11 million third quarter gain due to the restructuring of Asian polypropylene joint ventures and the sale of idled Australian polypropylene assets.  Compared to the prior period, olefins results decreased approximately $120 million. Ethylene margins declined 7 cents per pound primarily due to feedstock costs.  Ethylene sales and internal consumption were also lower due to planned maintenance at our Wesseling, Germany cracker.  Combined polyolefins results declined by approximately $50 million primarily due to lower spreads for both polyethylene and polypropylene.  Joint venture equity income increased by $3 million.

Three months ended December 31, 2016 versus three months ended December 31, 2015 – EBITDA decreased by $53 million versus the fourth quarter 2015, excluding a favorable $24 million quarter to quarter variance as a result of the 2015 LCM inventory adjustment.  The fourth quarter 2016 was adversely impacted by the $8 million pension settlement.  Compared to the prior period, olefins results were relatively unchanged.  Combined polyolefins results decreased approximately $50 million.  Polyethylene spreads declined while polypropylene margins were relatively unchanged.  Sales volume declined 4 percent and 10 percent for polyethylene and polypropylene, respectively.  Joint venture equity income increased by $2 million.

Full year ended December 31, 2016 versus full year ended December 31, 2015 – The segment achieved record EBITDA for the year.  EBITDA increased $212 million versus 2015, excluding a favorable $30 million year to year variance as a result of the 2015 LCM inventory adjustment.  2016 results include gains totaling $32 million due to the sale of the Petroken polypropylene business, restructuring of Asian polypropylene joint ventures and the sale of idled Australian polypropylene assets.  Olefins results declined by approximately $20 million.  Combined polyolefins results increased approximately $180 million compared to the prior year driven by a polyethylene and polypropylene spread improvement of approximately 2 cents per pound and 3 cents per pound, respectively. Joint venture equity income increased by $19 million.

Intermediates and Derivatives (I&D) – Our I&D segment produces and markets propylene oxide (PO) and its derivatives, oxyfuels and related products and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide and ethylene glycol.   

Table 4 - I&D Financial Overview


Three Months Ended

Year Ended


December 31,

September 30,

December 31,

December 31,

December 31,

Millions of U.S. dollars

2016

2016

2015

2016

2015

Operating income

$236

$240

$145

$1,058

$1,224

EBITDA

306

304

212

1,333

1,475

LCM charges, pre-tax

- -

- -

74

- -

181

EBITDA excluding LCM adjustments

306

304

286

1,333

1,656

 

Three months ended December 31, 2016 versus three months ended September 30, 2016 – EBITDA increased $2 million.  The fourth quarter was negatively impacted by a pension settlement of $16 million. PO and derivatives and intermediate chemicals results increased by approximately $50 million primarily due to improved methanol and ethylene glycol margins and reduced maintenance while PO and derivatives were relatively steady.  Oxyfuels results decreased approximately $20 million due to lower seasonal margins and volumes.  Joint venture equity income was relatively unchanged.

Three months ended December 31, 2016 versus three months ended December 31, 2015 – EBITDA increased $20 million versus the fourth quarter 2015, excluding a favorable $74 million quarter to quarter variance as a result of a LCM inventory adjustment in 2015.  2016 results were adversely impacted by the $16 million pension settlement.  Results for PO and derivatives and intermediate chemicals improved by approximately $20 million primarily due to increased styrene and acetyls results.  Oxyfuels improved approximately $10 million.  Joint venture equity income was relatively unchanged.

Full year ended December 31, 2016 versus full year ended December 31, 2015 – EBITDA decreased $323 million versus 2015, excluding a favorable $181 million year to year variance as a result of LCM inventory adjustments.  2016 results were negatively impacted by the $16 million pension settlement.  PO and derivatives and intermediate chemicals results decreased approximately $200 million primarily due to lower margins for methanol, ethylene glycol and PO derivatives, as well as the PO sales mix.  Oxyfuels results declined by approximately $90 million due to lower 2016 margins.  Joint venture equity income declined by $8 million.

Refining – The primary products of this segment include gasoline and distillates, including diesel fuel, heating oil and jet fuel.

Table 5 - Refining Financial Overview


Three Months Ended

Year Ended


December 31,

September 30,

December 31,

December 31,

December 31,

Millions of U.S. dollars

2016

2016

2015

2016

2015

Operating income (loss)

$40

($56)

($101)

($99)

$144

EBITDA

81

(10)

(59)

72

342

LCM charges, pre-tax

- -

- -

127

- -

177

EBITDA excluding LCM adjustments

81

(10)

68

72

519

 

Three months ended December 31, 2016 versus three months ended September 30, 2016 – EBITDA increased $91 million versus the third quarter 2015.  Underlying operational improvements provided approximately half of the increase while the consumption of low priced crude inventory from the prior year provided the balance.  The Houston refinery operated at 228,000 barrels per day, up 19,000 barrels per day from the prior quarter.  The Maya 2-1-1 industry benchmark spread was relatively unchanged, averaging approximately $19 per barrel.

Three months ended December 31, 2016 versus three months ended December 31, 2015 – EBITDA increased $13 million versus the fourth quarter 2015, excluding a favorable $127 million quarter to quarter variance as a result of a 2015 LCM inventory adjustment.  Fourth quarter 2016 throughput increased by 22,000 barrels per day from the prior year period. The Maya 2-1-1 industry benchmark spread increased by $0.45 per barrel, averaging $19 per barrel.  Both operating periods were adversely impacted by operating issues.

Full year ended December 31, 2016 versus full year ended December 31, 2015 – EBITDA decreased $447 million versus 2015, excluding a favorable $177 million year to year variance as a result of 2015 LCM inventory adjustments.  Throughput at the Houston Refinery averaged 201,000 barrels per day, down 37,000 barrels per day. The Maya 2-1-1 industry benchmark spread decreased by approximately $3 per barrel, averaging approximately $19 per barrel. The cost of RINs was approximately $30 million higher in 2016 versus the prior year.

Technology Segment – Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

Table 6 - Technology Financial Overview


Three Months Ended

Year Ended


December 31,

September 30,

December 31,

December 31,

December 31,

Millions of U.S. dollars

2016

2016

2015

2016

2015

Operating income

$51

$35

$54

$221

$197

EBITDA

61

45

65

262

243

 

Three months ended December 31, 2016 versus three months ended September 30, 2016 – EBITDA increased by $16 million driven by the timing of licensing revenue.

Three months ended December 31, 2016 versus three months ended December 31, 2015 – EBITDA decreased by $4 million.

Full year ended December 31, 2016 versus full year ended December 31, 2015 – Record results as EBITDA increased by $19 million, primarily due to improved catalyst results.

Capital Spending and Cash Balances
Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $567 million during the fourth quarter 2016 and $2.2 billion for the full year 2016. Our cash and liquid investment balance was $2.4 billion at December 31, 2016. We repurchased 5.2 million ordinary shares during the fourth quarter 2016 and 36.6 million shares during 2016. There were 404 million common shares outstanding as of December 31, 2016.  The company paid dividends of $1.4 billion during 2016.

CONFERENCE CALL
LyondellBasell will host a conference call February 3 at 11 a.m. ET.  Participants on the call will include Chief Executive Officer Bob Patel, Executive Vice President and Chief Financial Officer Thomas Aebischer and Vice President of Investor Relations Doug Pike

The toll-free dial-in number in the U.S. is 888-677-1826. A complete listing of toll-free numbers by country is available at www.lyb.com/teleconference for international callers. The pass code for all numbers is 6934553.

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

A replay of the call will be available from 2 p.m. ET February 3 until March 4 at 12:59 a.m. ET.  The replay dial-in numbers are 866-467-2412 (U.S.) and +1 203-369-1448 (international). The pass code for each is 2526.

ABOUT LYONDELLBASELL
LyondellBasell LYB is one of the world's largest plastics, chemical and refining companies and a member of the S&P 500.  LyondellBasell (www.lyb.com) 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; our ability to successfully execute projects and growth strategies; 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, 2015, which can be found at www.lyb.com on the Investor Relations page and on the Securities and Exchange Commission's website at www.sec.gov.

INFORMATION RELATED TO FINANCIAL MEASURES
This release makes reference to certain "non-GAAP" financial measures as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended.  The non-GAAP measures we have presented include income from continuing operations excluding LCM, diluted earnings per share excluding LCM, EBITDA and EBITDA excluding LCM.  LCM stands for "lower of cost or market," which is an accounting rule consistent with GAAP related to the valuation of inventory.  Our inventories are stated at the lower of cost or market.  Cost is determined using the last-in, first-out ("LIFO") inventory valuation methodology, which means that the most recently incurred costs are charged to cost of sales and inventories are valued at the earliest acquisition costs.  Market is determined based on an assessment of the current estimated replacement cost and selling price of the inventory.  In periods where the market price of our inventory declines substantially, cost values of inventory may be higher than the market value, which results in us writing down the value of inventory to market value in accordance with the LCM rule, consistent with GAAP. This adjustment is related to our use of LIFO accounting and the recent decline in pricing for many of our raw material and finished goods inventories. 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 and earnings and EBITDA excluding LCM, 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. 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 an alternative to operating cash flows as a measure of our liquidity.  We have also presented financial information herein exclusive of adjustments for LCM. 

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 8 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.

Table 7 - Reconciliation of Segment Information to Consolidated Financial Information (a)
























2015


2016


(Millions of U.S. dollars)

Q1


Q2


Q3


Q4


Total


Q1


Q2


Q3


Q4


Total


Sales and other operating revenues:
































Olefins & Polyolefins - Americas

$

2,551


$

2,679


$

2,516


$

2,218


$

9,964


$

2,115


$

2,211


$

2,342


$

2,409


$

9,077



Olefins & Polyolefins - EAI


2,911



3,061



2,932



2,672



11,576



2,578



2,721



2,634



2,646



10,579



Intermediates & Derivatives


1,918



2,159



2,039



1,656



7,772



1,702



1,769



1,805



1,950



7,226



Refining


1,607



2,102



1,693



1,155



6,557



955



1,289



1,330



1,561



5,135



Technology


136



107



100



122



465



132



129



102



116



479



Other/elims


(938)



(963)



(946)



(752)



(3,599)



(739)



(791)



(848)



(935)



(3,313)




Continuing Operations

$

8,185


$

9,145


$

8,334


$

7,071


$

32,735


$

6,743


$

7,328


$

7,365


$

7,747


$

29,183


Operating income (loss):
































Olefins & Polyolefins - Americas

$

934


$

920


$

740


$

662


$

3,256


$

707


$

646


$

582


$

458


$

2,393



Olefins & Polyolefins - EAI


236



359



412



302



1,309



358



423



447



266



1,494



Intermediates & Derivatives


271



405



403



145



1,224



255



327



240



236



1,058



Refining


74



119



52



(101)



144



(30)



(53)



(56)



40



(99)



Technology


64



45



34



54



197



73



62



35



51



221



Other


(4)



(3)



9



(10)



(8)



(3)



(2)



1



(3)



(7)




Continuing Operations

$

1,575


$

1,845


$

1,650


$

1,052


$

6,122


$

1,360


$

1,403


$

1,249


$

1,048


$

5,060


Depreciation and amortization:
































Olefins & Polyolefins - Americas

$

86


$

85


$

87


$

95


$

353


$

90


$

88


$

87


$

97


$

362



Olefins & Polyolefins - EAI


55



54



54



56



219



55



58



58



58



229



Intermediates & Derivatives


60



56



55



62



233



70



69



62



68



269



Refining


74



40



41



41



196



43



40



40



40



163



Technology


12



12



11



11



46



10



11



10



10



41




Continuing Operations

$

287


$

247


$

248


$

265


$

1,047


$

268


$

266


$

257


$

273


$

1,064


EBITDA: (b)
































Olefins & Polyolefins - Americas

$

1,031


$

1,014


$

841


$

775


$

3,661


$

878


$

754


$

682


$

563


$

2,877



Olefins & Polyolefins - EAI


357



492



549



427



1,825



509



576



584



398



2,067



Intermediates & Derivatives


337



466



460



212



1,475



326



397



304



306



1,333



Refining


149



159



93



(59)



342



14



(13)



(10)



81



72



Technology


76



57



45



65



243



83



73



45



61



262



Other


2



(2)



13



(26)



(13)



(3)



(4)



1



(3)



(9)




Continuing Operations

$

1,952


$

2,186


$

2,001


$

1,394


$

7,533


$

1,807


$

1,783


$

1,606


$

1,406


$

6,602


Capital, turnarounds and IT deferred spending:
































Olefins & Polyolefins - Americas

$

149


$

140


$

159


$

220


$

668


$

303


$

339


$

384


$

350


$

1,376



Olefins & Polyolefins - EAI


38



27



49



72



186



81



60



48



72



261



Intermediates & Derivatives


76



76



135



154



441



76



80



90



87



333



Refining


33



28



23



24



108



57



71



51



45



224



Technology


6



3



7



8



24



6



9



9



12



36



Other


4



4



- -



5



13



4



4



4



1



13




Continuing Operations

$

306


$

278


$

373


$

483


$

1,440


$

527


$

563


$

586


$

567


$

2,243



































































(a)

EBITDA as presented herein includes the impacts of pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. EBITDA for the second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. EBITDA for the first quarter of 2016 includes pre-tax LCM adjustments of $68 million and a $78 million pre-tax gain on the sale of our wholly owned Argentine subsidiary, respectively. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period. Fourth quarter 2016 EBITDA also included a pre-tax LCM adjustment of $29 million. See Tables 2 through 6 for LCM adjustments recorded for each segment.

(b)

See Table 8 for EBITDA calculation. 

 

Table 8 - EBITDA Calculation




































2015


2016


(Millions of U.S. dollars)

Q1


Q2


Q3


Q4


Total


Q1


Q2


Q3


Q4


Total

































Net income(a)

$

1,164


$

1,329


$

1,186


$

795


$

4,474


$

1,030


$

1,091


$

953


$

763


$

3,837


(Income) loss from discontinued operations, net of tax


3



(3)



3



2



5



- -



1



2



7



10


Income from continuing operations(a)


1,167



1,326



1,189



797



4,479



1,030



1,092



955



770



3,847



Provision for income taxes


440



541



487



262



1,730



432



346



326



282



1,386



Depreciation and amortization


287



247



248



265



1,047



268



266



257



273



1,064



Interest expense, net


58



72



77



70



277



77



79



68



81



305


EBITDA(b)

$

1,952


$

2,186


$

2,001


$

1,394


$

7,533


$

1,807


$

1,783


$

1,606


$

1,406


$

6,602

































































(a)

Amounts presented herein include after-tax LCM charges of $58 million, $114 million and $185 million in the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes an after-tax benefit of $6 million for the partial reversal of the first quarter 2015 LCM adjustment resulting from price recoveries during the period. The first quarter of 2016 includes an after-tax LCM charge of $47 million and a $78 million after-tax gain related to the sale of our wholly owned Argentine subsidiary. The second quarter of 2016 includes an after-tax benefit of $47 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period. The fourth quarter of 2016 also includes an $18 million after tax LCM charge.

(b)

EBITDA as presented herein includes the impact of pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. EBITDA for the second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. The first quarter of 2016 includes a pre-tax LCM charge of $68 million and a pre-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment.  The fourth quarter of 2016 also includes a $29 million pre-tax LCM charge.

 

Table 9 - Selected Segment Operating Information
































2015


2016







Q1


Q2


Q3


Q4


Total


Q1


Q2


Q3


Q4


Total


Olefins and Polyolefins - Americas























Volumes (million pounds)
























Ethylene produced


2,364


2,415


2,514


2,391


9,684


2,392


1,899


1,939


2,173


8,403




Propylene produced


805


740


697


798


3,040


832


748


575


660


2,815




Polyethylene sold


1,473


1,575


1,577


1,578


6,203


1,554


1,426


1,517


1,485


5,982




Polypropylene sold


627


698


662


606


2,593


612


582


659


623


2,476



Benchmark Market Prices
























West Texas Intermediate crude oil (USD per barrel)


48.57


57.95


45.36


42.16


48.71


33.63


46.01


44.94


49.29


43.56




Light Louisiana Sweet ("LLS") crude oil (USD per barrel)


52.84


62.93


50.20


43.53


52.36


35.34


47.39


46.52


50.60


45.03




Houston Ship Channel natural gas (USD per million BTUs)


2.76


2.76


2.72


2.11


2.57


1.93


2.06


2.79


3.01


2.45




U.S. weighted average cost of ethylene production (cents/pound)


10.2


9.7


9.6


10.9


10.1


9.8


12.0


10.6


14.3


11.7




U.S. ethylene (cents/pound)


34.8


34.2


30.3


27.5


31.7


26.7


30.3


33.0


32.7


30.7




U.S. polyethylene [high density] (cents/pound)


65.7


67.3


64.3


57.0


63.6


52.3


59.0


60.7


58.3


57.6




U.S. propylene (cents/pound)


49.7


41.7


33.2


31.3


39.0


31.0


32.7


37.8


36.2


34.4




U.S. polypropylene [homopolymer] (cents/pound)


67.7


61.7


59.3


62.7


62.8


67.8


61.7


60.2


55.8


61.4



























Olefins and Polyolefins - Europe, Asia, International























Volumes (million pounds)
























Ethylene produced


1,007


1,047


944


978


3,976


950


941


1,066


946


3,903




Propylene produced


600


632


575


575


2,382


555


577


649


563


2,344




Polyethylene sold


1,533


1,360


1,304


1,379


5,576


1,434


1,386


1,315


1,330


5,465




Polypropylene sold


1,817


1,529


1,673


1,757


6,776


1,773


1,617


1,509


1,582


6,481



Benchmark Market Prices (€0.01 per pound)
























Western Europe weighted average cost of ethylene production


22.9


23.2


14.4


22.5


20.8


16.3


21.2


17.9


23.8


19.8




Western Europe ethylene


39.3


47.1


46.6


41.4


43.6


38.4


41.1


42.3


43.1


41.2




Western Europe polyethylene [high density]


45.2


60.6


61.2


56.9


56.0


55.4


57.6


55.7


55.2


56.0




Western Europe propylene


37.1


44.4


41.7


31.0


38.5


26.3


28.8


30.7


33.3


29.8




Western Europe polypropylene [homopolymer]


49.8


62.5


59.3


47.4


54.7


46.5


49.5


49.5


51.7


49.3


























Intermediates and Derivatives























Volumes (million pounds)
























Propylene oxide and derivatives


870


751


697


682


3,000


793


743


752


749


3,037




Intermediate Chemicals:

























Ethylene oxide and derivatives


268


312


282


237


1,099


301


233


224


329


1,087





Styrene monomer


903


735


904


889


3,431


917


933


911


933


3,694





Acetyls


547


810


733


623


2,713


702


821


751


776


3,050




Oxyfuels and Related Products:

























TBA Intermediates


433


321


421


371


1,546


415


391


410


361


1,577




Volumes (million gallons)

























MTBE/ETBE


229


299


268


258


1,054


270


278


298


264


1,110




Benchmark Market Margins  (cents per gallon)

























MTBE - Northwest Europe


64.0


106.0


119.0


49.8


85.1


44.4


78.7


55.3


50.6


57.2

























Refining























Volumes (thousands of barrels per day)
























Heavy crude oil processing rate


241


255


249


206


238


186


183


209


228


201



Benchmark Market Margins
























Light crude oil - 2-1-1


15.02


16.42


15.29


9.44


14.04


8.67


11.52


11.46


11.20


10.73




Light crude oil - Maya differential


8.72


7.56


7.48


9.11


8.26


9.19


9.55


7.52


7.80


8.51


















































Source:  LYB and third party consultants

Note:  Benchmark market prices for U.S. and Western Europe polyethylene and polypropylene reflect discounted prices. Volumes presented represent third party sales of selected key products.

 

Table 10 - Unaudited Income Statement Information






































2015


2016


(Millions of U.S. dollars)

Q1


Q2


Q3


Q4


Total


Q1


Q2


Q3


Q4


Total

































Sales and other operating revenues

$

8,185


$

9,145


$

8,334


$

7,071


$

32,735


$

6,743


$

7,328


$

7,365


$

7,747


$

29,183


Cost of sales(a)


6,379



7,047



6,465



5,792



25,683



5,166



5,702



5,903



6,420



23,191


Selling, general and administrative expenses


205



228



194



201



828



193



199



188



253



833


Research and development expenses


26



25



25



26



102



24



24



25



26



99



Operating income(a)


1,575



1,845



1,650



1,052



6,122



1,360



1,403



1,249



1,048



5,060


Income from equity investments


69



90



93



87



339



91



117



81



78



367


Interest expense, net


(58)



(72)



(77)



(70)



(277)



(77)



(79)



(68)



(81)



(305)


Other income (expense), net(b)


21



4



10



(10)



25



88



(3)



19



7



111



Income from continuing operations before income taxes(a) (b)


1,607



1,867



1,676



1,059



6,209



1,462



1,438



1,281



1,052



5,233


Provision for income taxes


440



541



487



262



1,730



432



346



326



282



1,386



Income from continuing operations(c)


1,167



1,326



1,189



797



4,479



1,030



1,092



955



770



3,847


Income (loss) from discontinued operations, net of tax


(3)



3



(3)



(2)



(5)



- -



(1)



(2)



(7)



(10)




Net income(c)


1,164



1,329



1,186



795



4,474



1,030



1,091



953



763



3,837


Net (income) loss attributable to non-controlling interests


2



1



(1)



- -



2



- -



- -



(1)



- -



(1)




Net income attributable to the Company shareholders(c)

$

1,166


$

1,330


$

1,185


$

795


$

4,476


$

1,030


$

1,091


$

952


$

763


$

3,836



































































(a)

Amounts presented herein include pre-tax LCM charges of $92 million, $181 million and $284 million for the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes a pre-tax LCM benefit of $9 million for the partial reversal of the first quarter 2015 LCM adjustment. The first and fourth quarters of 2016 include pre-tax LCM charges of $68 million and $29 million, respectively. Second quarter 2016 EBITDA includes a pre-tax LCM benefit of $68 million for the reversal of the first quarter 2016 LCM adjustment due to price recoveries during the period.

(b)

Includes a pre-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary in the second quarter of 2016.

(c)

Amounts presented herein include after-tax LCM charges of $58 million, $114 million and $185 million in the first, third and fourth quarters of 2015, respectively. The second quarter of 2015 includes an after-tax benefit of $6 million for the partial reversal of the first quarter 2015 LCM adjustment resulting from price recoveries during the period. The first and fourth quarters of 2016 include after-tax LCM charges of $47 million and $18 million, respectively, and an after-tax gain of $78 million on the sale of our wholly owned Argentine subsidiary. Second quarter 2016 EBITDA includes an after tax LCM benefit of $47 million for the reversal of the first quarter 2016 LCM adjustment.

 

Table 11 - Charges (Benefits) Included in Income from Continuing Operations




2015


2016

Millions of U.S. dollars (except share data)

Q1


Q2


Q3


Q4


Annual
Impact


Q1


Q2


Q3


Q4


Annual
Impact

Pretax charges (benefits):































Out of period tax adjustment

$

- -


$

- -


$

- -


$

- -


$

- -


$

- -


$

- -


$

- -


$

61


$

74


Gain on sale of wholly owned subsidiary


- -



- -



- -



- -



- -



(78)



- -



- -



- -



(78)


Lower of cost or market inventory adjustment


92



(9)



181



284



548



68



(68)



- -



29



29


Pension settlement charge


- -



- -



- -



- -



- -



- -



- -



- -



58



58


Emission allowance credits, amortization


35



- -



- -



- -



35



- -



- -



- -



- -



- -

Total pretax charges (benefits)


127



(9)



181



284



583



(10)



(68)



- -



148



83

Provision for (benefit from) income tax related to these items


(47)



3



(67)



(99)



(210)



(21)



21



- -



(32)



(32)

After-tax effect of net charges (benefits)

$

80


$

(6)


$

114


$

185


$

373


$

(31)


$

(47)


$

- -


$

116


$

51

Effect on diluted earnings per share

$

(0.17)


$

0.02


$

(0.25)


$

(0.42)


$

(0.80)


$

0.07


$

0.11


$

- -


$

(0.29)


$

(0.12)































 

Table 12 - Unaudited Cash Flow Information








































2015


2016


(Millions of U.S. dollars)

Q1


Q2


Q3


Q4


Total


Q1



Q2



Q3



Q4



Total




































Net cash provided by operating activities

$

1,468


$

1,446


$

1,768


$

1,160


$

5,842


$

1,300


$

1,261


$

1,332


$

1,713


$

5,606




































Net cash provided by (used in) investing activities


(443)



(727)



67



52



(1,051)



(597)



(471)



(459)



(770)



(2,297)


































Net cash used in financing activities


(401)



(1,021)



(1,684)



(1,744)



(4,850)



(333)



(1,039)



(1,195)



(782)



(3,349)
































 

Table 13 - Unaudited Balance Sheet Information






























March 31,


June 30,


September 30,


December 31,


March 31,


June 30,


September 30,


December 31,


(Millions of U.S. dollars)

2015


2015


2015


2015


2016


2016


2016


2016





























Cash and cash equivalents

$

1,616


$

1,325


$

1,474


$

924


$

1,318


$

1,060


$

740


$

875


Restricted cash


2



3



1



7



4



4



4



3


Short-term investments


1,478



1,989



1,602



1,064



1,332



1,023



1,090



1,147


Accounts receivable, net


3,089



3,373



2,924



2,517



2,683



2,806



2,852



2,842


Inventories


4,267



4,179



4,138



4,051



3,978



4,009



4,015



3,809


Prepaid expenses and other current assets(a)


1,195



1,121



1,059



1,226



1,009



1,081



852



923




Total current assets


11,647



11,990



11,198



9,789



10,324



9,983



9,553



9,599


Property, plant and equipment, net


8,430



8,636



8,793



8,991



9,373



9,681



10,057



10,137


Investments and long-term receivables:



























Investment in PO joint ventures


373



357



357



397



398



390



399



415




Equity investments


1,581



1,612



1,602



1,608



1,734



1,610



1,681



1,575




Other investments and long-term receivables


38



126



125



122



18



18



17



20


Goodwill


533



543



543



536



548



542



543



528


Intangible assets, net


695



671



644



640



618



588



562



550


Other assets(a)


637



600



605



674



559



623



607



618




Total assets

$

23,934


$

24,535


$

23,867


$

22,757


$

23,572


$

23,435


$

23,419


$

23,442





























Current maturities of long-term debt

$

4


$

3


$

3


$

4


$

4


$

4


$

3


$

2


Short-term debt


514



582



573



353



594



616



621



594


Accounts payable


2,631



2,755



2,450



2,182



2,243



2,357



2,329



2,529


Accrued liabilities


1,482



1,455



1,784



1,810



1,600



1,374



1,357



1,415


Deferred income taxes(a)


429



434



383



- -



- -



- -



- -



- -




Total current liabilities


5,060



5,229



5,193



4,349



4,441



4,351



4,310



4,540


Long-term debt


7,677



7,658



7,674



7,671



8,504



8,485



8,464



8,385


Other liabilities


2,038



2,063



2,044



2,036



2,125



2,143



2,151



2,113


Deferred income taxes(a)


1,653



1,635



1,604



2,127



2,134



2,149



2,387



2,331


Stockholders' equity


7,478



7,927



7,328



6,550



6,344



6,283



6,082



6,048


Non-controlling interests


28



23



24



24



24



24



25



25




Total liabilities and stockholders' equity

$

23,934


$

24,535


$

23,867


$

22,757


$

23,572


$

23,435


$

23,419


$

23,442





















































(a)

Our prospective adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, in December 2015 resulted in the classification of our deferred taxes as of December 2015 as noncurrent.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lyondellbasell-reports-2016-earnings-300401852.html

SOURCE LyondellBasell Industries

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