LyondellBasell Industries N.V. (LYB) reported lower earnings for the first quarter of 2023 compared to the same period last year, primarily due to weak margins. Despite this, the company continues to anticipate a slight increase in global demand driven by seasonal trends, with transportation fuel demand expected to increase over the summer.
Financial Results
LyondellBasell recorded a first-quarter profit of $474 million, down by 64.1% from the year-ago quarter’s profit of $1,320 million. The company’s net sales for the first quarter were $10,247 million, which decreased by around 22.1% from $13,157 million in the prior-year quarter.
Adjusted earnings were $2.50 per share, down by 37.5% from the year-ago quarter figure of $4.
LyondellBasell generated $482 million in cash from operating activities during the quarter. The company returned $460 million as dividends and share repurchases during the quarter.
Segmental Highlights
In the Olefins & Polyolefins — Americas division, EBITDA decreased roughly 42.4% year over year to $541 million in the reported quarter. Olefins’ results fell due to lower margins. The Olefins & Polyolefins — Europe, Asia, the international segment recorded EBITDA of $77 million, down from the prior-year quarter levels of $214 million. Polyolefins results declined due to lower margins resulting from weak demand.
The Advanced Polymer Solutions segment posted a loss of $226 million, down from EBITDA of $71 million in the prior-year quarter. High levels of raw material and production costs resulted in a decline in the performance of this segment, which also faced lower demand. EBITDA in the Intermediates and Derivatives segment decreased around 22% on a year-over-year basis to $426 million, primarily due to weaker propylene oxide and derivatives results as lower demand hurt margins in the quarter.
The Refining segment reported an EBITDA of $246 million in the reported quarter, up by around 66.2% from the year-ago quarter. The Technology segment’s EBITDA was $73 million, down around 29.1% year over year due to lower catalyst volumes resulting from low demand.
Outlook
LyondellBasell anticipates a slight increase in global demand driven by seasonal trends, with demand for transportation fuels expected to increase over the summer. Delays at the beginning of industry-wide capacity expansions for polyethylene in North America are expected to lower new market supply and support polyethylene margins. The company estimates operating Intermediates & Derivatives assets at 80% and aims to modestly raise global olefins and polyolefins operating rates to 85% to keep pace with the market. The company will continue to monitor the impact of shifting global monetary policies and strengthening economic conditions in China on petrochemical markets in the second half of 2023.