Corrected: LyondellBasell estimates Q1 earnings 18.6% ahead of plan

06 May 2009 16:45  [Source: ICIS news]

Correction: In the ICIS news story headlined "LyondellBasell estimates Q1 earnings 18.6% ahead of plan" dated 6 May 2009, please read in the 14th paragraph …closing 14 plants and facilities… instead of … closing 14 plants …. A corrected story follows.

(adds missing words "and contractors" paragraph 14)

HOUSTON (ICIS news)--LyondellBasell, operating under US bankruptcy protection, was ahead of its projected first-quarter earnings behind a better-than-expected showing within the chemicals and polymers markets, the Netherlands-based company said on Wednesday.

The company’s first-quarter earnings before interest, taxes, depreciation, amortisation and reorganisation (EBITDAR) are now projected at $350m (€262.5m), up 18.6% from the previous projection of $295m.

Within chemicals, the company said it exceeded its targets both for March and for the first quarter behind lower fixed costs. Despite weak downstream demand that lowered operating rates, margins were improving within European olefins, the company said.

In the US, prices are lagging because ethane remains inexpensive. Ethane cracking remains the favoured US process, the company said.

Margins have generally held steady within intermediate chemicals and derivatives, LyondellBasell said, with only minimal recovery since late fourth-quarter 2008. As such, the company said it has two propylene oxide (PO) plants that remain down.

Within polymers, LyondellBasell said its results are also ahead of plan for both March and the first quarter.

While the European markets remain generally weak, polyethylene (PE) volumes in North America are strong and plants are running near full capacity, the company said.

Fixed costs within the polymers segment are lower than expected as well.

Going forward, LyondellBasell said it anticipated improvement in the second quarter but cautioned that it is currently lagging behind its planned second-quarter EBITDAR of $637m.

Reasons for the lag include continued pressure on refining spreads and an overall chemicals outlook that changed little from the first quarter, the company said.

Limited optimism appears visible within polymers, where the company said it has seen signs of strengthening demand in April.

Likewise, LyondellBasell said it had seen some signs of improving polymer volumes in Europe.

LyondellBasell has 79 mostly US affiliates currently under Chapter 11 bankruptcy protection.

The company has said it seeks to improve overall results by $1.3bn/year by the end of 2010, and plans to get there through lower fixed costs as well as cutting 4,800 employees and contractors and closing 14 plants and facilities.

($1 = €0.75)

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By: Ben DuBose
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