LyondellBasell Reports First Quarter 2019 Earnings

• Net Income: $0.8 billion
• Diluted earnings per share: $2.19 per share
• EBITDA: $1.4 billion
• Issued dividends and repurchased shares totaling $884 million; 5.6 million shares repurchased during the first quarter

Comparisons with the prior quarter and first quarter 2018 are available in the following table:

Table 1 – Earnings Summary

LyondellBasell Industries (NYSE: LYB) announced net income for the first quarter 2019 of $0.8 billion, or $2.19 per share.  First quarter 2019 EBITDA was $1.4 billion.  Integration activities related to the acquisition of A. Schulman are on schedule and estimated to have generated $85 million in forward annual run-rate synergies.

“LyondellBasell began 2019 with strong operational performance, increasing sales volumes in Europe and Asia and delivering promised value from the A. Schulman acquisition.  EBITDA for our Olefins and Polyolefins – Europe, Asia, International segment rebounded with a 133 percent improvement over the fourth quarter 2018 and a strong recovery in polyolefins sales volumes.  EBITDA for our Advanced Polymer Solutions segment demonstrated the promised quarterly synergies in addition to achieving our expectations for significant improvement in baseline business performance.  Our Houston refinery delivered another quarter of highly reliable operations, reducing the effects of a challenging refining market,” said Bob Patel, LyondellBasell CEO.

“Market demand improved in the first quarter as the industry recovered from an unusually slow fourth quarter.  During the first quarter, sales volumes increased 14 percent for polypropylene globally, 9 percent for propylene oxide and derivatives and 15 percent for polypropylene compounds in Europe.  We continued to advance our value-driven growth strategy by actively managing our asset portfolio with the acquisition of a syngas plant in La Porte, Texas and the increase of our ownership of methanol production at the site to 100 percent,” Patel said.           

OUTLOOK

“In the first few weeks of April we have seen signs of industry improvement.  The strength in market sentiment is driving higher margins for our Olefins & Polyolefins – EAI segment.  In our Olefins & Polyolefins – Americas segment we are seeing volume improvement as we enter a period of strong seasonal demand.  The refining market is also improving with increasing gasoline spreads and wider discounts for heavy sour crude oil.  Looking beyond the quarter, we will advance our growth strategy and increase our earnings with a robust pipeline of licensing revenue for 2019 in addition to the third quarter start-up of our world-scale HDPE plant which utilizes our innovative Hyperzone technology,” Patel said.

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

LyondellBasell manages operations through six operating segments: 1) Olefins and Polyolefins – Americas; 2) Olefins and Polyolefins – Europe, Asia and International; 3) Intermediates and Derivatives; 4) Advanced Polymer Solutions; 5) Refining; and 6) Technology.  Results for our Advanced Polymer Solutions segment incorporates the businesses acquired from A. Schulman beginning on August 21, 2018.  Historical segment results for Olefins and Polyolefins – Americas and Olefins and Polyolefins – Europe, Asia and International prior to the acquisition were recast as a result of the shift of polypropylene compounds, Catalloy and polybutene-1 product lines to Advanced Polymer Solutions.

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

Table 2 – O&P-Americas Financial Overview

Three months ended March 31, 2019 versus three months ended December 31, 2018 – EBITDA decreased $115 million versus the fourth quarter 2018.  Compared with the prior period, olefins results decreased $130 million.  Ethylene margin declined as the price of ethylene decreased $42 per metric ton.  Polyolefins results declined nearly $30 million primarily due to decreases in margin for both polyethylene and polypropylene.

Three months ended March 31, 2019 versus three months ended March 31, 2018 – EBITDA decreased $240 million versus the first quarter 2018.  Compared with the prior period, olefins results decreased $110 million.  Ethylene margin declined as the price of ethylene decreased $79 per metric ton.  Polyolefins results decreased approximately $120 million driven by a spread decline in polyethylene over ethylene of $132 per metric ton and a decrease in volume.

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

Table 3 – O&P-EAI Financial Overview

Three months ended March 31, 2019 versus three months ended December 31, 2018 – EBITDA increased $169 million versus the fourth quarter 2018, which included a $36 million gain on the sale of our carbon black subsidiary in France.  Compared with the prior period, olefins results increased more than $95 million.  Volume and margin increased with the completion of planned maintenance at our cracker in Wesseling, Germany in the fourth quarter partially offset by unplanned maintenance in the first quarter.  Combined polyolefins results increased more than $55 million.  Polyethylene volume and margin improved with the completion of planned maintenance and polypropylene volume increased with improved market conditions.  Joint venture equity income increased by $25 million with the completion of planned maintenance at our joint venture sites.

Three months ended March 31, 2019 versus three months ended March 31, 2018 – EBITDA decreased $123 million versus the first quarter 2018.  Compared with the prior period, olefins results decreased $35 million driven by a decline in volume due to unplanned maintenance in the first quarter 2019.  Combined polyolefins results decreased approximately $40 million.  Polyolefins spreads declined for polyethylene and polypropylene over monomer $68 per metric ton and $83 per metric ton, respectively.  Joint venture equity income decreased by $25 million due to reduced margins.

Intermediates & Derivatives (I&D) – Our I&D segment produces and markets Propylene Oxide & 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 March 31, 2019 versus three months ended December 31, 2018 – EBITDA increased $11 million versus the fourth quarter 2018.  Compared with the prior period, Propylene Oxide & Derivatives results increased nearly $30 million.  Volumes increased with the completion of planned maintenance at our Bayport, Texas facility.  Intermediate Chemicals results decreased approximately $50 million driven by a decline in volume.  Margin also decreased primarily in methanol and ethylene glycol offset by an improvement in styrene.  Oxyfuels & Related Products results increased more than $15 million primarily due to an improvement in margin.

Three months ended March 31, 2019 versus three months ended March 31, 2018 – EBITDA decreased $96 million versus the first quarter 2018.  Compared with the prior period, Propylene Oxide & Derivatives results decreased approximately $10 million due to reduced margins.  Intermediate Chemicals results decreased $40 million.  Margin declined primarily in styrene, methanol and acetyls partially offset by an increase in methanol volume.  Oxyfuels & Related Products decreased by nearly $30 million due to margin and volume declines as a result of softer gasoline market conditions.

Advanced Polymer Solutions (APS) – Our Advanced Polymer Solutions segment produces and markets in two lines of business: Compounding & Solutions and Advanced Polymers.  Compounding & Solutions includes polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders.  Advanced Polymers consists of Catalloy and polybutene-1.  A. Schulman was acquired on August 21, 2018, and results from the acquisition are included prospectively.

Table 5 – Advanced Polymer Solutions Financial Overview

Three months ended March 31, 2019 versus three months ended December 31, 2018 – EBITDA increased $62 million versus the fourth quarter 2018.  Integration costs related to the acquisition of A. Schulman and assigned to the segment were $4 million lower in the first quarter 2019 versus the fourth quarter.  Compared with the prior period, Compounding & Solutions results increased more than $40 million.  Volume increased with seasonal demand improvement and margin improved after an unusually slow fourth quarter in the automotive market.  Advanced Polymers results increased more than $5 million.

Three months ended March 31, 2019 versus three months ended March 31, 2018 – EBITDA increased $25 million versus the first quarter 2018.  Integration costs related to the acquisition and assigned to the segment were $16 million during the first quarter 2019.  Compared with the prior period, Compounding & Solutions results increased nearly $55 million primarily due to the addition of new product lines from the acquisition.  Advanced Polymers results decreased approximately $10 million.

Refining – Our Refining segment produces and markets gasoline and distillates, including diesel fuel, heating oil and jet fuel.

Table 6 – Refining Financial Overview

Three months ended March 31, 2019 versus three months ended December 31, 2018 – EBITDA increased $69 million versus the fourth quarter 2018.  The Houston Refinery operated at 259,000 barrels per day, 75,000 barrels per day more than the prior period with the completion of planned maintenance.  The Maya 2-1-1 industry benchmark crack spread modestly increased $2.66 per barrel to $13.55 per barrel for the first quarter. The Maya 2-1-1 remained challenged through February due to high prices for heavy sour crude oil and a soft gasoline market before improving significantly during March.

Three months ended March 31, 2019 versus three months ended March 31, 2018 – EBITDA decreased $78 million versus the first quarter 2018.  Challenging market conditions led to a decrease in the Maya 2-1-1 spread of $7.17 per barrel to $13.55 per barrel.  Crude throughput increased by 7,000 barrels per day driven by improved reliability.

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

Table 7 – Technology Financial Overview

Three months ended March 31, 2019 versus three months ended December 31, 2018 – EBITDA increased $22 million versus the fourth quarter 2018 primarily due to an increase in licensing revenue.

Three months ended March 31, 2019 versus three months ended March 31, 2018 – EBITDA increased $27 million versus the first quarter 2018 driven by an increase in licensing revenue and catalyst sales volumes.

Capital Spending and Cash Balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $599 million during the first quarter 2019.  Our cash and liquid investment balance was $1.3 billion at March 31, 2019.  We repurchased 5.6 million ordinary shares during the first quarter 2019. There were 370 million common shares outstanding as of March 31, 2019.  The company paid dividends of $372 million during the first quarter 2019.

Reconciliations and Additional Information

Quantitative reconciliations of EBITDA to net income, the most comparable GAAP measure, are provided in Table 9 at the end of this release. Additional operating and financial information, including reconciliations of non-GAAP measures, may be found on our website at www.lyondellbasell.com/investorrelations.