LyondellBasell misses quarterly profit estimates on falling refining margins
Petrochemicals manufacturer LyondellBasell fell short of expectations for third-quarter profit on Friday due to declining refining margins and weakness in its chemicals segment, sending its shares lower 2.8% in premarket trading.
Refining margins have been down globally as oil demand growth remains below average due to China's slowing economy.
LyondellBasell recorded lower margins, driven by compressed gasoline and distillate crack spreads and high refining operating rates, with the Maya 2-1-1 industry crack spread decreasing approximately $15 per barrel.
Crack spread is the price difference between a barrel of crude oil and the petroleum products refined from it.
Crude throughput decreased by around 8,000 bpd due to unplanned downtime in the reported quarter.
The company reported a loss of $23 MM in its refining segment in adjusted EBITDA, compared to a year-ago core profit of $105 MM.
The chemicals maker also said year-end seasonality would result in softer demand across most businesses in the fourth quarter, with sequentially higher natural gas and ethane feedstock costs moderating North American integrated polyolefins.
Manufacturing activity in the Eurozone declined in September, as demand fell sharply despite factories slashing prices.
Germany, which accounts for 6% of LYB's total revenue after the U.S., saw its worst drop in factory performance in 12 months, while China, the company's third-biggest market according to data compiled by LSEG, saw its manufacturing activity contract in July.
Adjusted core profit in LyondellBasell's Intermediates & Derivatives segment, which makes oxyfuels and intermediate chemicals, fell 55% to $317 MM from the year-ago period.
Revenue for the quarter ended Sept. 30 was $10.32 B, down from $10.63 B last year. This compares to analysts' estimate of $10.60 B, according to data compiled by LSEG.
The company posted an adjusted profit of $1.88 per share in the July-to-September quarter, compared to analysts' estimate of $1.98 per share, according to data compiled by LSEG.
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