By: Pravin Prashant
Last updated : August 05, 2020 8:18 pm
EBITDA decreased $112 million versus the second quarter 2019, excluding an unfavorable variance of $34 million due to second quarter 2020 LCM inventory charges.
LyondellBasell Industries reported decline in the second quarter earnings whereby net income stood at $0.3 billion or $0.94 per share.
The second quarter 2020 included a $88 million non-cash, inventory valuation benefit and $11 million of integration costs, net of tax, that impacted earnings by $0.26 per share and $0.03 per share, respectively. Second quarter 2020 EBITDA was $0.8 billion, or $0.7 billion excluding LCM.
"Our Olefins & Polyolefins businesses continued to benefit from strong demand for polymers used in consumer-driven packaging and healthcare applications. As expected, our Intermediates & Derivatives, Refining and Advanced Polymer Solutions segments were impacted by significant reductions in demand for transportation fuels and polymers utilised in automotive manufacturing and other durable goods markets. We believe the pandemic-driven decline in demand bottomed during the second quarter. As the quarter progressed, demand and prices for polyethylene exports from North America improved and the U.S. ethane feedstock advantage returned during May and June with rebounding crude oil prices," said Bob Patel, CEO, LyondellBasell.
"The company applied our experience with the first quarter progression of events in Asia to nimbly manage our global businesses and generate $1.3 billion of cash from operating activities during an extremely challenging second quarter. We moved quickly to strengthen our balance sheet and bolster liquidity. With our substantial and highly efficient cash generation, LyondellBasell remains well-positioned to navigate through these volatile market conditions," added Patel.
"In June and July, we raised operating rates and prices in response to increased demand for North American polyethylene exports to Asia. With increased mobility and reductions in fuel inventories, we expect improving demand for our Refining and Oxyfuels & Related Products businesses. Similarly, our Advanced Polymer Solutions segment is benefiting from rebounding demand for our plastics used in automotive manufacturing," commented Patel.
"Our cash generation is strong. We expect the recent startup of our Hyperzone polyethylene capacity, the establishment of new Asian joint ventures and the integration of our A Schulman acquisition will all add to our profitability. We accelerated our plans to reduce capital expenditures and are aggressively managing our inventories to prioritize liquidity and maximize cash flow," added Patel.
Second quarter 2020 olefins results decreased about $230 million versus the first quarter 2020 driven by a decline in margin and volume. Ethylene margin decreased primarily due to lower co-product prices. Ethylene volume decreased due to lower demand. Polyolefins results decreased approximately $45 million due to lower margins and volumes as a result of reduced demand.