07 August 2009 18:45 [Source: ICIS news]
HOUSTON (ICIS news)--LyondellBasell continued to exceed its planned polymer earnings in June, but lagged expectations within chemicals and fuels, the producer said on Friday.
June earnings before interest, taxes, depreciation, amortisation and reorganisation (EBITDAR) were $188m (€132m), off 7.4% from May’s EBITDAR of $203m and even with April levels.
The decline is largely due to the refining business coming in significantly below expectations, as a result of poor industry margins and mechanical issues at the company’s ?xml:namespace>
However, LyondellBasell said that the mechanical issues with the refinery’s sulphur recovery system were fixed, and that the refinery ran near full crude capacity in July, potentially bringing a boost to third-quarter earnings.
The refinery has a capacity of 270,600 bbl/day, according to news reports.
“We should post improved results as we benefit from the return of the
The fuels segment posted a June EBITDAR of $2m, substantially down from the $15m it earned in May.
The chemicals segment also declined, with June’s $52m EBITDAR off 10.3% from May’s EBITDAR of $58m.
Specifically, olefins margins shrank because price increases did not keep up with rising feedstock costs, the company said.
The weaker olefins margins were partially offset by strengthening propylene oxide (PO) demand, the company said.
The company’s polymers segment held steady, posting an EBITDAR of $90m in June after earning $91m in May behind strong
In addition, Dineen said Lyondell had yet to see the oft-mentioned threat of increased Middle Eastern capacity flowing into the European and North American markets.
But the polymers segment isn’t expected to grow significantly in the third quarter. While export opportunities will continue for US PE, the arbitrage window has, for the most part, closed for European products and
Through June, LyondellBasell registered EBITDAR of $928m, close to projected year-to-date earnings of $932m. Polymers and chemicals were ahead of the plan, while the fuels segment fell short of the operating forecast by $210m.
“Our ability to be on track and surprisingly close to our projections speaks well to the necessity of having a diverse portfolio,” chief financial officer Kent Potter said.
The $928m EBITDAR for the first half of 2009 is less than half of the $2.01bn earnings posted for the first six months of 2008.
So far, the company has already cut 2,883 employees and contractors – including the layoff of 650 employees in the second quarter - and closed eight of 14 plants, more than halfway to each target.
Also, the company reduced its inventory by 22%, well ahead of its 15% goal.
“We don’t expect the situation to improve quickly,” Potter said. “We have to focus on safety, cost control, restructuring and reliable operations to support near-term results.”
($1 = €0.70)
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