26 July 2013 14:10 [Source: ICIS news]
(adds sector performance, outlook)
LONDON (ICIS)--LyondellBasell’s net income for the second quarter increased by 21% year on year to $927m (€695m) as olefins and polyolefins (O&P) earnings continued to improve, the Netherlands-registered company said on Friday.
Total group sales fell slightly year on year to $11.1bn from $11.2bn, while group earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 5% to $1.65bn.
"The back-to-basics strategy that we put in place three years ago continues to yield strong results and returns for our shareholders. This was particularly evident in both our US and European olefins businesses," said LyondellBasell CEO Jim Gallogly.
"In both regions, our plants ran well above average industry operating rates while also utilising additional advantaged natural gas liquid feedstocks," he added.
Operating income and EBITDA increased year on year for the company’s O&P divisions for the Americas and Europe, Asia and international (EAI) during the quarter driven on the back of higher margins, the company said.
EBITDA for the EAI region grew by 31% to $295m year on year, while Americas P&O EBITDA increased to $951m in the second quarter of 2013 from $898m during the same period in 2012.
Intermediates and derivatives EBITDA fell by 22% year on year during the quarter to $338m , as a result of a $70m fall in earnings for propylene oxide and propylene oxide derivatives caused by turnaround costs and lower butanediol margins, LyondellBasell said.
Refining EBITDA was flat quarter on quarter at $20m, but significantly down from the $160m posted for the second quarter of 2012. The shortfall is due in part to a $53m insurance settlement received in the 2012 quarter, but lower production and higher costs also hurt earnings, the company said.
Despite a strong first half of the year for olefins and polyolefins, the company cautioned that challenges still exist within the refining industry, and the environment for the rest of the year remains highly changeable.
Gallogly said: “Our integrated assets and diversified portfolio of US olefins and Intermediates and Derivatives businesses remain very profitable. In Europe, the market continues to seek equilibrium in a slow economy, and we have seen rising naphtha prices.
"Refining has been a challenging industry and continues to evolve. We believe that these market conditions coupled with an imbalance within renewable fuel requirements will continue to pressure our near term results," he added.
Strong American O&P results were also the key driver of income growth for the company in the previous quarter.
($1 = €0.75)
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