LyondellBasell Swings to Profit as Olefins Margins Surge
LyondellBasell posted second-quarter net income of $559 million, reversing a first-quarter profit of just $125 million as tighter global supply lifted olefins and polyolefins margins.
LyondellBasell Industries (LYB), the Houston-based chemicals and plastics maker, reported second-quarter sales of $9.18 billion, up 27.5% from $7.20 billion in the first quarter and up 19.8% from $7.66 billion a year earlier. Net income reached $559 million, or $1.71 a diluted share, compared with $125 million, or $0.38 a share, in the first quarter and $115 million, or $0.34 a share, in last year's second quarter.
The results mark the third consecutive quarter of sequential improvement following a 2023 marked by $1.25 billion in full-year asset write-downs and a $738 million net loss. LyondellBasell moved from a $140 million net loss in the fourth quarter to $125 million in net income in the first quarter, then to $559 million in the second, a trajectory attributed to tighter global supply and higher operating rates rather than one-time gains.
EBITDA excluding identified items more than tripled sequentially, to $2.13 billion from $615 million in the first quarter and $715 million a year earlier. Diluted earnings per share excluding identified items told a similar story, climbing from $0.49 in the first quarter to $4.30 in the second, a jump reflecting margin expansion rather than one-time items. Reported GAAP earnings were held back by $842 million in net-of-tax identified items, or $2.59 a share, dominated by a $734 million pre-tax loss on the sale of divested European olefins and polyolefins assets and a $74 million write-down tied to an Americas joint venture, a far larger and differently composed charge than the first quarter's $38 million in identified items.
The Olefins and Polyolefins-Americas segment drove the turnaround, with EBITDA excluding identified items nearly quadrupling to $1.27 billion from $327 million in the first quarter. Roughly $520 million of that improvement came from olefins and about $415 million from combined polyolefins gains, supported by cracker utilization near 90% to 95%. The European and international counterpart segment swung to $331 million in adjusted EBITDA from a $6 million loss, even as reported EBITDA fell to a $432 million loss because of the divestiture charge; the segment also completed the sale of four European assets in the quarter for a $310 million cash contribution.
The Intermediates and Derivatives segment added $386 million in adjusted EBITDA, up from $224 million in the first quarter, as oxyfuels, methanol and propylene oxide derivatives margins improved despite an unplanned outage at the Bayport propylene oxide and tert-butyl alcohol unit. The unit was restarted in June and exited the quarter at full rates.
Cash from operating activities totaled $752 million, with working capital a net use of cash as higher prices and operating rates increased receivables and inventory. Cash and equivalents rose to $2.6 billion and total liquidity stood at $7.1 billion at quarter-end.
For the third quarter, LyondellBasell guided operating rates to 85% for North American olefins and polyolefins, 70% for European olefins and polyolefins, and 85% for intermediates and derivatives, down from the roughly 90% and 85% utilization actually achieved in the second quarter for the North American and European businesses, respectively. The step-down is due to planned downtime at its Clinton, Iowa facility in the second half of the year.
LyondellBasell also raised its cumulative cost-savings target under its Cash Improvement Plan to $1.3 billion by the end of 2026, up from an original $1.1 billion goal announced with fourth-quarter results, and is on track toward an incremental $500 million target for 2026 through fixed-cost reductions and lower capital spending.