LYONDELLBASELL INDUSTRIES N.V. HOUSTON and LONDON, July 29, 2016 /PRNewswire/ --
Second Quarter 2016 Highlights
-- Income from continuing operations: $1.1 billion ($1.0 billion excluding
LCM(1))
-- Diluted earnings per share: $2.56 per share ($2.45 per share excluding
LCM)
-- EBITDA: $1.8 billion ($1.7 billion excluding LCM)
-- Share repurchases and dividends totaled $1.1 billion; repurchased 8.8
million shares during the second quarter, approximately 2% of the
outstanding shares
-- Authorized a fourth share repurchase program for up to an additional 10%
of shares over the next 18 months
-- Increased second quarter 2016 interim dividend by 9% to $0.85 per share
Comparisons with the prior quarter and second quarter 2015 are available in the following table:
Table 1 - Earnings Summary
--------------------------
Three Months Ended Six Months Ended
------------------
June 30, March 31, June 30, June 30,
--------
Millions of U.S. dollars (except share data) 2016 2016 2015 2016 2015
------------------------------------------- ---- ---- ---- ---- ----
Sales and other operating revenues $7,328 $6,743 $9,145 $14,071 $17,330
---------------------------------- ------ ------ ------ ------- -------
Net income(a) 1,091 1,030 1,329 2,121 2,493
------------ ----- ----- ----- ----- -----
Income from continuing operations(b) 1,092 1,030 1,326 2,122 2,493
----------------------------------- ----- ----- ----- ----- -----
Diluted earnings per share (U.S. dollars):
------------------------------------------
Net income(c) 2.56 2.37 2.82 4.93 5.22
------------ ---- ---- ---- ---- ----
Income from continuing operations(b) 2.56 2.37 2.81 4.93 5.22
----------------------------------- ---- ---- ---- ---- ----
Diluted share count (millions) 425 434 472 429 477
----------------------------- --- --- --- --- ---
EBITDA(d) 1,783 1,807 2,186 3,590 4,138
-------- ----- ----- ----- ----- -----
Excluding LCM Impact:
---------------------
LCM charges (benefits), pre-tax (68) 68 (9) - - 83
------------------------------- --- --- --- --- ---
Income from continuing operations(b) 1,045 1,077 1,320 2,122 2,545
----------------------------------- ----- ----- ----- ----- -----
Diluted earnings per share (U.S. dollars):
------------------------------------------
Income from continuing operations(b) 2.45 2.48 2.79 4.93 5.33
----------------------------------- ---- ---- ---- ---- ----
EBITDA(d) 1,715 1,875 2,177 3,590 4,221
-------- ----- ----- ----- ----- -----
(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 (loss) 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 (NYSE: LYB) today announced earnings from continuing operations for the second quarter 2016 of $1.1 billion, or $2.56 per share. Second quarter 2016 EBITDA was $1.8 billion. The quarter included a $68 million non-cash, pre-tax benefit for the impact of a lower of cost or market (LCM) inventory adjustment ($47 million after-tax benefit). Excluding the LCM adjustment, earnings from continuing operations during the second quarter totaled $1.0 billion, or $2.45 per share and EBITDA was $1.7 billion.
"Excluding the first quarter gain from the Petroken business sale and the impact of maintenance activities, overall second quarter results were similar to the first quarter. Balance across our business portfolio enabled us to generate earnings in excess of $1 billion and earnings per share of $2.56. Industry trends generally developed as we anticipated resulting in continued strong polyolefin performance and seasonally stronger fuel margins. However, due to an April upset at our refinery, the benefits of higher fuel margins were only seen in our Oxyfuels business," said Bob Patel, LyondellBasell's CEO.
OUTLOOK
"During the third quarter, chemical and polyolefin markets thus far have generally been well balanced with trends similar to the second quarter. However, refining and oxyfuel margins have declined. Within our system, refinery repairs have been completed, and the Corpus Christi ethylene plant expansion is expected to be completed by the end of the third quarter. During the second half of the year our plant maintenance schedule continues to be significant with turnarounds at additional O&P and I&D facilities. Although our inventory and scheduling efforts will only partially mitigate the production impact during this heavy planned maintenance period, we look forward to the continuing returns from these investments in long-term reliability," Patel said.
LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT
LyondellBasell manages operations through five operating segments: 1) Olefins & Polyolefins - Americas; 2) Olefins & Polyolefins - Europe, Asia and International (EAI); 3) Intermediates & Derivatives; 4) Refining; and 5) Technology.
The following comments and analysis represent underlying business activity and are exclusive of LCM inventory adjustments.
Olefins & 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.
Table 2 - O&P-Americas Financial Overview
-----------------------------------------
Three Months Ended Six Months Ended
------------------
June 30, March 31, June 30, June 30,
--------
Millions of U.S. dollars 2016 2016 2015 2016 2015
------------------------ ---- ---- ---- ---- ----
Operating income $646 $707 $920 $1,353 $1,854
---------------- ---- ---- ---- ------ ------
EBITDA 754 878 1,014 1,632 2,045
------ --- --- ----- ----- -----
LCM charges (benefits), pre-tax - - - - (21) - - 22
------------------------------- --- --- --- --- ---
EBITDA excluding LCM adjustments 754 878 993 1,632 2,067
-------------------------------- --- --- --- ----- -----
Three months ended June 30, 2016 versus three months ended March 31, 2016 - EBITDA decreased $124 million for the second quarter 2016 versus the first quarter 2016. First quarter 2016 results included a $57 million gain on the sale of the Petroken polypropylene business. Results declined by $67 million exclusive of the Petroken gain. Compared to the prior period, underlying olefin results were relatively unchanged as margins increased while customer and internal derivative maintenance resulted in reduced ethylene volumes. Combined polyolefin results continued to be strong despite declining by approximately $60 million. Polyethylene sales volumes declined by 8% due to plant maintenance. Polyethylene spreads increased by approximately 1 cent per pound. Polypropylene spreads declined by approximately 2 cents per pound and volumes were down 5% primarily due to the first quarter sale of Petroken. Joint venture equity income declined by $2 million.
Three months ended June 30, 2016 versus three months ended June 30, 2015 - EBITDA decreased $239 million versus the second quarter 2015, excluding an unfavorable $21 million quarter to quarter variance as a result of the LCM inventory adjustments. Olefin results drove the decline as quarterly EBITDA decreased approximately $280 million versus the prior year primarily due to lower ethylene margin. Combined polyolefin results increased approximately $30 million versus the prior year period. Polyethylene results declined due to maintenance while margins were relatively unchanged. Polypropylene benefitted from a spread improvement of approximately 10 cents per pound and volumes were lower in 2016 due to the first quarter Petroken sale. Joint venture equity income improved by $12 million consistent with strong polypropylene margins.
Olefins & 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.
Table 3 - O&P-EAI Financial Overview
------------------------------------
Three Months Ended Six Months Ended
Millions of U.S. dollars
------------------------
June 30, March 31, June 30, June 30,
--------
2016 2016 2015 2015 2016
---- ---- ---- ---- ----
Operating income $423 $358 $359 $781 $595
---------------- ---- ---- ---- ---- ----
EBITDA 576 509 492 1,085 849
------ --- --- --- ----- ---
LCM charges (benefits), pretax (40) 40 - - - - - -
------------------------------ --- --- --- --- ---
EBITDA excluding LCM adjustments 536 549 492 1,085 849
-------------------------------- --- --- --- ----- ---
Three months ended June 30, 2016 versus three months ended March 31, 2016 - EBITDA decreased by $13 million versus the first quarter 2016, excluding a favorable $80 million quarter to quarter variance as a result of LCM inventory adjustments. First quarter 2016 results included a $21 million gain on the sale of the Petroken polypropylene compounding business. Exclusive of the Petroken sale, results were relatively unchanged. Olefin results decreased approximately $30 million on relatively unchanged volumes. Combined polyolefin results were steady. Polypropylene compounds and polybutene-1 results increased by approximately $10MM. Equity income from joint ventures increased by $27 million consistent with strong polypropylene margins.
Three months ended June 30, 2016 versus three months ended June 30, 2015 - EBITDA increased by $44 million versus the second quarter 2015, excluding a favorable $40 million quarter to quarter variance as a result of LCM inventory adjustments. Olefin results declined by approximately $60 million due to a 2 cent per pound decrease in margin combined with reduced volumes related to planned maintenance at our Berre, France facility. Combined polyolefin results increased approximately $65 million as spreads for polyethylene improved by approximately 1 cent per pound while polypropylene spreads improved by approximately 4 cents per pound. Combined polyolefin volumes increased by approximately 4%. Polypropylene compounds and polybutene-1 results improved by approximately $10 million. Equity income from joint ventures increased by $17 million.
Intermediates & 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 (including methanol), ethylene oxide and its derivatives, and oxyfuels.
Table 4 - I&D Financial Overview
--------------------------------
Three Months Ended Six Months Ended
------------------
June 30, March 31, June 30, June 30,
--------
Millions of U.S. dollars 2016 2016 2015 2016 2015
------------------------ ---- ---- ---- ---- ----
Operating income $327 $255 $405 $582 $676
---------------- ---- ---- ---- ---- ----
EBITDA 397 326 466 723 803
------ --- --- --- --- ---
LCM charges (benefits), pre-tax (28) 28 17 - - 61
------------------------------- --- --- --- --- ---
EBITDA excluding LCM adjustments 369 354 483 723 864
-------------------------------- --- --- --- --- ---
Three months ended June 30, 2016 versus three months ended March 31, 2016 - EBITDA increased $15 million versus the first quarter 2016, excluding a favorable $56 million quarter to quarter variance as a result of LCM adjustments related to inventory. Results for PO and PO derivatives declined by approximately $20 million partially due to product sales mix. Intermediate chemicals results improved by approximately $10 million, primarily due to an approximately 4 cents per pound improvement in styrene margin. This increase was partially offset by lower methanol margins. Oxyfuels improved approximately $30 million consistent with seasonal margin improvements. Equity income from joint ventures was relatively unchanged.
Three months ended June 30, 2016 versus three months ended June 30, 2015 - EBITDA decreased $114 million versus the second quarter 2015, excluding a favorable $45 million quarter to quarter variance as a result of LCM inventory adjustments. Results for PO and PO derivatives were relatively unchanged. Intermediate chemicals results declined by approximately $45 million primarily due to reduced methanol margins and lower EO/EG results partially offset by higher styrene sales volumes. Oxyfuels results decreased approximately $55 million relative to a very strong second quarter 2015. Equity income from joint ventures decreased by $2 million.
Refining - The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.
Table 5 - Refining Financial Overview
-------------------------------------
Three Months Ended Six Months Ended
------------------
June 30, March 31, June 30, June 30,
--------
Millions of U.S. dollars 2016 2016 2015 2016 2015
------------------------ ---- ---- ---- ---- ----
Operating income (loss) ($53) ($30) $119 ($83) $193
---------------------- ---- ---- ---- ---- ----
EBITDA (13) 14 159 1 308
------ --- --- --- --- ---
LCM charges (benefits), pre-tax - - - - (5) - - - -
------------------------------- --- --- --- --- ---
EBITDA excluding LCM adjustments (13) 14 154 1 308
-------------------------------- --- --- --- --- ---
Three months ended June 30, 2016 versus three months ended March 31, 2016 - EBITDA decreased $27 million versus the first quarter 2016. The Houston refinery operated at 183,000 barrels per day primarily due to the refinery fire. The Maya 2-1-1 industry benchmark crack spread increased by $3.21 per barrel, averaging $21.07 per barrel. Despite the improved industry crack spreads, spreads at the Houston Refinery did not improve due to operational limitations.
Three months ended June 30, 2016 versus three months ended June 30, 2015 - EBITDA decreased $167 million versus the second quarter 2015, excluding an unfavorable $5 million quarter to quarter variance as a result of LCM inventory adjustments. Second quarter 2016 throughput was down by 72,000 barrels per day from the prior year period due to the refinery fire and subsequent downtime for repairs. The Maya 2-1-1 industry benchmark crack spread decreased by $2.91 per barrel.
Technology Segment - The principal products of the Technology segment include polyolefin catalysts and production process technology licenses and related services.
Table 6 - Technology Financial Overview
---------------------------------------
Three Months Ended Six Months Ended
------------------
June 30, March 31, June 30, June 30,
--------
Millions of U.S. dollars 2016 2016 2015 2016 2015
------------------------ ---- ---- ---- ---- ----
Operating income $62 $73 $45 $135 $109
---------------- --- --- --- ---- ----
EBITDA 73 83 57 156 133
------ --- --- --- --- ---
Three months ended June 30, 2016 versus three months ended March 31, 2016 - EBITDA decreased by $10 million due to lower licensing revenue.
Three months ended June 30, 2016 versus three months ended June 30, 2015 - EBITDA increased by $16 million due to improved catalyst and licensing results.
Capital Spending and Cash Balances
Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $563 million during the second quarter 2016. Our cash and liquid investment balance was $2.5 billion at June 30, 2016. We repurchased 8.8 million ordinary shares during the second quarter 2016. There were 419 million common shares outstanding as of June 30, 2016. The company paid dividends of $362 million during the second quarter of 2016.
CONFERENCE CALL
LyondellBasell will host a conference call July 29 at 11 a.m. EDT. 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. EDT July 29 until August 29 at 12:59 a.m. EDT. The replay dial-in numbers are 866-453-2318 (U.S.) and +1 203-369-1226 (international). The pass code for each is 72916.
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.lyb.com) manufactures products at 57 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; 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 YTD
------------------------- --- --- --- --- ----- --- --- ---
Sales and other operating
revenues:
Olefins & Polyolefins -
Americas $2,551 $2,679 $2,516 $2,218 $9,964 $2,115 $2,211 $4,326
Olefins & Polyolefins - EAI 2,911 3,061 2,932 2,672 11,576 2,578 2,721 5,299
Intermediates & Derivatives 1,918 2,159 2,039 1,656 7,772 1,702 1,769 3,471
Refining 1,607 2,102 1,693 1,155 6,557 955 1,289 2,244
Technology 136 107 100 122 465 132 129 261
Other/elims (938) (963) (946) (752) (3,599) (739) (791) (1,530)
---- ---- ---- ---- ------ ---- ---- ------
Continuing
Operations $8,185 $9,145 $8,334 $7,071 $32,735 $6,743 $7,328 $14,071
====== ====== ====== ====== ======= ====== ====== =======
Operating income (loss):
Olefins & Polyolefins -
Americas $934 $920 $740 $662 $3,256 $707 $646 $1,353
Olefins & Polyolefins - EAI 236 359 412 302 1,309 358 423 781
Intermediates & Derivatives 271 405 403 145 1,224 255 327 582
Refining 74 119 52 (101) 144 (30) (53) (83)
Technology 64 45 34 54 197 73 62 135
Other (4) (3) 9 (10) (8) (3) (2) (5)
--- --- --- --- --- --- --- ---
Continuing
Operations $1,575 $1,845 $1,650 $1,052 $6,122 $1,360 $1,403 $2,763
====== ====== ====== ====== ====== ====== ====== ======
Depreciation and amortization:
Olefins & Polyolefins -
Americas $86 $85 $87 $95 $353 $90 $88 $178
Olefins & Polyolefins - EAI 55 54 54 56 219 55 58 113
Intermediates & Derivatives 60 56 55 62 233 70 69 139
Refining 74 40 41 41 196 43 40 83
Technology 12 12 11 11 46 10 11 21
Continuing
Operations $287 $247 $248 $265 $1,047 $268 $266 $534
==== ==== ==== ==== ====== ==== ==== ====
EBITDA: (b)
Olefins & Polyolefins -
Americas $1,031 $1,014 $841 $775 $3,661 $878 $754 $1,632
Olefins & Polyolefins - EAI 357 492 549 427 1,825 509 576 1,085
Intermediates & Derivatives 337 466 460 212 1,475 326 397 723
Refining 149 159 93 (59) 342 14 (13) 1
Technology 76 57 45 65 243 83 73 156
Other 2 (2) 13 (26) (13) (3) (4) (7)
--- --- --- --- --- --- --- ---
Continuing
Operations $1,952 $2,186 $2,001 $1,394 $7,533 $1,807 $1,783 $3,590
====== ====== ====== ====== ====== ====== ====== ======
Capital, turnarounds and IT
deferred spending:
Olefins & Polyolefins -
Americas $149 $140 $159 $220 $668 $303 $339 $642
Olefins & Polyolefins - EAI 38 27 49 72 186 81 60 141
Intermediates & Derivatives 76 76 135 154 441 76 80 156
Refining 33 28 23 24 108 57 71 128
Technology 6 3 7 8 24 6 9 15
Other 4 4 - - 5 13 4 4 8
--- --- --- --- --- --- --- ---
Continuing
Operations $306 $278 $373 $483 $1,440 $527 $563 $1,090
==== ==== ==== ==== ====== ==== ==== ======
(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 a pre-tax LCM
adjustment of $68 million and a
$78 million pre-tax gain 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 due to price
recoveries during the period.
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 YTD
------------------------- --- --- --- --- ----- --- --- ---
Net income(a) $1,164 $1,329 $1,186 $795 $4,474 $1,030 $1,091 $2,121
(Income) loss from discontinued operations,
net of tax 3 (3) 3 2 5 - - 1 1
--- --- --- --- --- --- --- ---
Income from continuing operations(a) 1,167 1,326 1,189 797 4,479 1,030 1,092 2,122
Provision for income taxes 440 541 487 262 1,730 432 346 778
Depreciation and amortization 287 247 248 265 1,047 268 266 534
Interest expense, net 58 72 77 70 277 77 79 156
--- --- --- --- --- --- --- ---
EBITDA(b) $1,952 $2,186 $2,001 $1,394 $7,533 $1,807 $1,783 $3,590
====== ====== ====== ====== ====== ====== ====== ======
(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.
(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.
Table 9 - Selected Segment Operating Information
------------------------------------------------
2015 2016
---- ----
Q1 Q2 Q3 Q4 Total Q1 Q2 YTD
--- --- --- --- ----- --- --- ---
Olefins and Polyolefins - Americas
Volumes (million pounds)
-----------------------
Ethylene produced 2,364 2,415 2,514 2,391 9,684 2,392 1,899 4,291
Propylene produced 805 740 697 798 3,040 832 748 1,580
Polyethylene sold 1,473 1,575 1,577 1,578 6,203 1,554 1,426 2,980
Polypropylene sold 627 698 662 606 2,593 612 582 1,194
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 39.97
Light Louisiana Sweet ("LLS") crude oil (USD per
barrel) 52.84 62.93 50.20 43.53 52.36 35.34 47.39 41.51
Natural gas (USD per million BTUs) 2.76 2.76 2.72 2.11 2.57 1.93 2.06 1.99
U.S. weighted average cost of ethylene production
(cents/pound) 10.2 9.7 9.6 10.9 10.1 9.8 12.0 10.9
U.S. ethylene (cents/pound) 34.8 34.2 30.3 27.5 31.7 26.7 30.3 28.5
U.S. polyethylene [high density] (cents/pound) 65.7 67.3 64.3 57.0 63.6 52.3 59.0 55.7
U.S. propylene (cents/pound) 49.7 41.7 33.2 31.3 39.0 31.0 32.7 31.8
U.S. polypropylene [homopolymer] (cents/pound) 67.7 61.7 59.3 62.7 62.8 67.8 61.7 64.8
Olefins and Polyolefins - Europe, Asia, International
Volumes (million pounds)
-----------------------
Ethylene produced 1,007 1,047 944 978 3,976 950 941 1,891
Propylene produced 600 632 575 575 2,382 555 577 1,132
Polyethylene sold 1,533 1,360 1,304 1,379 5,576 1,434 1,386 2,820
Polypropylene sold 1,817 1,529 1,673 1,757 6,776 1,773 1,617 3,390
Benchmark Market Prices (EUR0.01 per pound)
------------------------------------------
Western Europe weighted average cost of ethylene
production 22.9 23.2 14.4 22.5 20.8 16.3 21.2 18.8
Western Europe ethylene 39.3 47.1 46.6 41.4 43.6 38.4 41.1 39.7
Western Europe polyethylene [high density] 45.2 60.6 61.2 56.9 56.0 55.4 57.6 56.5
Western Europe propylene 37.1 44.4 41.7 31.0 38.5 26.3 28.8 27.6
Western Europe polypropylene [homopolymer] 49.8 62.5 59.3 47.4 54.7 46.5 49.5 48.0
Intermediates and Derivatives
Volumes (million pounds)
-----------------------
Propylene oxide and derivatives 870 751 697 682 3,000 793 743 1,536
Ethylene oxide and derivatives 268 312 282 237 1,099 301 233 534
Styrene monomer 903 735 904 889 3,431 917 933 1,850
Acetyls 547 810 733 623 2,713 702 821 1,523
TBA Intermediates 433 321 421 371 1,546 415 391 806
Volumes (million gallons)
------------------------
MTBE/ETBE 229 299 268 258 1,054 270 278 548
Benchmark Market Margins (cents per gallon)
-------------------------------------------
MTBE - Northwest Europe 64.0 106.0 119.0 49.8 85.1 44.4 78.7 61.7
Refining
Volumes (thousands of barrels per day)
-------------------------------------
Heavy crude oil processing rate 241 255 249 206 238 186 183 184
Benchmark Market Margins
------------------------
Light crude oil - 2-1-1 15.02 16.42 15.29 9.44 14.04 8.67 11.52 10.13
Light crude oil - Maya differential 8.72 7.56 7.48 9.11 8.26 9.19 9.55 9.37
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 YTD
------------------------- --- --- --- --- ----- --- --- ---
Sales and other operating revenues $8,185 $9,145 $8,334 $7,071 $32,735 $6,743 $7,328 $14,071
Cost of sales(a) 6,379 7,047 6,465 5,792 25,683 5,166 5,702 10,868
Selling, general and administrative expenses 205 228 194 201 828 193 199 392
Research and development expenses 26 25 25 26 102 24 24 48
Operating income(a) 1,575 1,845 1,650 1,052 6,122 1,360 1,403 2,763
Income from equity investments 69 90 93 87 339 91 117 208
Interest expense, net (58) (72) (77) (70) (277) (77) (79) (156)
Other income (expense), net(b) 21 4 10 (10) 25 88 (3) 85
Income from continuing operations before income taxes(a) (b) 1,607 1,867 1,676 1,059 6,209 1,462 1,438 2,900
Provision for income taxes 440 541 487 262 1,730 432 346 778
Income from continuing operations(c) 1,167 1,326 1,189 797 4,479 1,030 1,092 2,122
Income (loss) from discontinued operations, net of tax (3) 3 (3) (2) (5) - - (1) (1)
Net income(c) 1,164 1,329 1,186 795 4,474 1,030 1,091 2,121
Net (income) loss attributable to non-controlling interests 2 1 (1) - - 2 - - - - - -
Net income attributable to the Company
shareholders(c) $1,166 $1,330 $1,185 $795 $4,476 $1,030 $1,091 $2,121
====== ====== ====== ==== ====== ====== ====== ======
(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 quarter
of 2016 includes a pre-tax LCM
charge of $68 million. Second
quarter 2016 EBITDA includes a
pre-tax LCM benefit of $68
million for the partial
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 quarter
of 2016 includes an after-tax
LCM charge of $47 million 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 Total Q1 Q2 YTD
------------------------------------------- --- --- --- --- ----- --- --- ---
Pretax charges (benefits):
Gain on sale of wholly owned
subsidiary $ - - $ - - $ - - $ - - $ - - $(78) - - (78)
Lower of cost or market inventory
adjustment 92 (9) 181 284 548 68 $(68) $ - -
Emission allowance credits,
amortization 35 - - - - - - 35 - - - - - -
Total pretax charges (benefits) 127 (9) 181 284 583 (10) (68) (78)
Provision for (benefit from) income tax related to these items (47) 3 (67) (99) (210) (21) 21 - -
--- --- --- --- ---- --- --- ---
After-tax effect of net charges (benefits) $80 $(6) $114 $185 $373 $(31) $(47) $(78)
=== === ==== ==== ==== ==== ==== ====
Effect on diluted earnings per share $(0.17) $0.02 $(0.25) $(0.42) $(0.80) $0.07 $0.11 $0.18
Table 12 - Unaudited Cash Flow Information
------------------------------------------
2015 2016
---- ----
(Millions of U.S. dollars) Q1 Q2 Q3 Q4 Total Q1 Q2 YTD
------------------------- --- --- --- --- ----- --- --- ---
Net cash provided by operating activities $1,468 $1,446 $1,768 $1,160 $5,842 $1,300 $1,261 $2,561
Net cash provided by (used in) investing
activities (443) (727) 67 52 (1,051) (597) (471) (1,068)
Net cash used in financing activities (401) (1,021) (1,684) (1,744) (4,850) (333) (1,039) (1,372)
Table 13 - Unaudited Balance Sheet Information
----------------------------------------------
March 31, June 30, September 30, December 31, March 31, June 30,
(Millions of U.S. dollars) 2015 2015 2015 2015 2016 2016
------------------------- ---- ---- ---- ---- ---- ----
Cash and cash equivalents $1,616 $1,325 $1,474 $924 $1,318 $1,060
Restricted cash 2 3 1 7 4 4
Short-term investments 1,478 1,989 1,602 1,064 1,332 1,023
Accounts receivable, net 3,089 3,373 2,924 2,517 2,683 2,806
Inventories 4,267 4,179 4,138 4,051 3,978 4,009
Prepaid expenses and other current assets(a) 1,195 1,121 1,059 1,226 1,009 1,081
----- ----- ----- ----- ----- -----
Total current assets 11,647 11,990 11,198 9,789 10,324 9,983
Property, plant and equipment, net 8,430 8,636 8,793 8,991 9,373 9,681
Investments and long-term receivables:
Investment in PO joint ventures 373 357 357 397 398 390
Equity investments 1,581 1,612 1,602 1,608 1,734 1,610
Other investments and long-term
receivables 38 126 125 122 18 18
Goodwill 533 543 543 536 548 542
Intangible assets, net 695 671 644 640 618 588
Other assets(a) 637 600 605 674 559 623
--- --- --- --- --- ---
Total assets $23,934 $24,535 $23,867 $22,757 $23,572 $23,435
======= ======= ======= ======= ======= =======
Current maturities of long-term debt $4 $3 $3 $4 $4 $4
Short-term debt 514 582 573 353 594 616
Accounts payable 2,631 2,755 2,450 2,182 2,243 2,357
Accrued liabilities 1,482 1,455 1,784 1,810 1,600 1,374
Deferred income taxes(a) 429 434 383 - - - - - -
--- --- --- --- --- ---
Total current liabilities 5,060 5,229 5,193 4,349 4,441 4,351
Long-term debt 7,677 7,658 7,674 7,671 8,504 8,485
Other liabilities 2,038 2,063 2,044 2,036 2,125 2,143
Deferred income taxes(a) 1,653 1,635 1,604 2,127 2,134 2,149
Stockholders' equity 7,478 7,927 7,328 6,550 6,344 6,283
Non-controlling interests 28 23 24 24 24 24
--- --- --- --- --- ---
Total liabilities and stockholders'
equity $23,934 $24,535 $23,867 $22,757 $23,572 $23,435
======= ======= ======= ======= ======= =======
(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.
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SOURCE LyondellBasell
