LyondellBasell Reports Record 2015 Earnings

"During 2015, LyondellBasell generated record earnings, advanced our growth program, and continued returning cash to shareholders at an industry-leading rate.  Our company posted strong results, with record performance from our Olefins and Polyolefins - Europe, Asia and International, Intermediates and Derivatives, and Technology segments.  Despite the challenging oil and gas environment, LyondellBasell's performance remained focused and steady.  We continue to prove that we are capable of delivering strong results under a wide range of market conditions," said Bob Patel, LyondellBasell chief executive officer. 

"During 2015 we continued to implement and expand our strategic programs.  We completed a 250 million pound per year ethylene expansion and increased our polypropylene compounds capacity by 120 million pounds.  We also advanced additional value-enhancing projects including a propylene oxide and tertiary butyl alcohol facility, an ethylene expansion at our Corpus Christi plant and U.S. polyethylene capacity," continued Patel.

"Our cash generation continued to be very strong in 2015 and we returned cash to shareholders through share repurchases and dividends totaling approximately $6.1 billion.  Since initiating our dividend and share repurchases, we have paid approximately $9.2 billion in dividends and acquired approximately 25% of the then outstanding shares," Patel said.

OUTLOOK

"We are confident that our industry position and our continued focus on cost and operating discipline will serve us well under a variety of market conditions.  While near-term industry performance will partially hinge on the direction of raw material costs and subsequent price responses, our growth positions remain advantaged, product demand continues to be good and our expansions are generating incremental earnings.  During 2016 we plan to complete an 800 million pound ethylene expansion project, complete engineering for our one billion pound propylene oxide plant and finalize our polyethylene expansion plans.  LyondellBasell will continue to prudently pursue value-creating expansions while maintaining focus on operational performance, earnings growth and shareholder value," Patel said. 

LYONDELLBASELL BUSINESS RESULTS DISCUSSION BY REPORTING SEGMENT

LyondellBasell manages operations through five operating segments: 1) Olefins and Polyolefins – Americas; 2) Olefins and Polyolefins – Europe, Asia and International (EAI); 3) Intermediates and Derivatives; 4) Refining; and 5) Technology. 

Comments and analysis represent underlying business activity and are exclusive of LCM inventory adjustments.

Olefins and Polyolefins - Americas (O&P-Americas) – The primary products of this segment include ethylene and its co-products (propylene, butadiene and benzene), polyethylene, polypropylene and Catalloy process resins.

Three months ended December 31, 2015 versus three months ended September 30, 2015 –EBITDA decreased $86 million for the fourth quarter 2015 versus the third quarter 2015, excluding a favorable $20 million quarter to quarter variance as a result of LCM inventory adjustments. Compared to the prior period, underlying olefins results decreased approximately $130 million.  This decrease was driven by lower ethylene and coproduct prices.  Lower feedstock costs resulted in ethylene margins that were approximately 6 cents per pound lower than the third quarter 2015.  Our ethylene plants operated at 95% of capacity.  Combined polyolefin results increased by approximately $40 million.  Polyethylene volumes remained strong while spreads were relatively unchanged.  Polypropylene volumes declined due to operating issues while spreads over monomer improved by approximately 4 cents per pound.  Joint venture equity income improved by $3 million.

Three months ended December 31, 2015 versus three months ended December 31, 2014 – EBITDA decreased $440 million versus the fourth quarter 2014, excluding a favorable $175 million quarter to quarter variance as a result of the LCM inventory adjustments.  Olefin results accounted for the majority of the decline as quarterly EBITDA decreased approximately $660 million versus the prior year.  Ethylene margins declined by approximately 28 cents per pound.  Combined polyolefin results increased approximately $210 million versus the prior year period.  Polyethylene volume improved by approximately 9 percent and spreads improved by approximately 6 cents per pound.  Polypropylene spreads improved by approximately 12 cents per pound.  Joint venture equity income improved by $10 million.

Full year ended December 31, 2015 versus full year ended December 31, 2014 – Segment EBITDA decreased $369 million versus 2014, excluding a favorable $119 million year to year variance as a result of the LCM inventory adjustments.  Olefin results declined by approximately $970 million from the prior year.  Ethylene margins declined by approximately 17 cents per pound versus 2014.  Lower ethylene sales prices in 2015 were partially offset by lower feedstock costs.  Production volume was approximately 14% higher as a result of the 2014 La Porte expansion and the absence of the 2014 La Porte turnaround.  Combined polyolefin results increased approximately $570 million versus the prior year.  Polyethylene spreads over ethylene improved approximately 5 cents per pound and volume increased approximately 5 percent following the 2014 Matagorda expansion.  Polypropylene spreads improved by approximately 8 cents per pound.  Equity income improved by $21 million versus the prior year due to stronger volumes and margins at our joint venture in Mexico.

Olefins and Polyolefins - Europe, Asia, International (O&P-EAI) – The primary products of this segment include ethylene and its co-products (propylene and butadiene), polyethylene, polypropylene, global polypropylene compounds, Catalloy process resins and Polybutene-1 resins.

Three months ended December 31, 2015 versus three months ended September 30, 2015 – EBITDA decreased $104 million versus the record third quarter 2015, excluding an unfavorable $18 million quarter to quarter variance as a result of LCM inventory adjustments.  Olefin results decreased approximately $130 million due to lower margins while ethylene volumes improved by approximately 4 percent.  Combined polyolefin results improved by approximately $15 million and largely continued to maintain high spreads.  Polypropylene compounds and polybutene-1 results improved by approximately $20 million.  Equity income from joint ventures declined by $11 million.

Three months ended December 31, 2015 versus three months ended December 31, 2014 – EBITDA increased by $59 million versus the fourth quarter 2014, excluding a favorable $20 million quarter to quarter variance as a result of LCM inventory adjustments.  Olefin results decreased by approximately $120 million primarily as a result of lower margins.  Ethylene volume decreased by approximately 8 percent due to the turnaround at our M?nchsm?nster cracker in 2015.  Combined polyolefin results increased approximately $150 million due to improved margins and higher volumes for both polyethylene and polypropylene.  Polypropylene compounds and polybutene-1 results improved by approximately $20 million.  Equity income from joint ventures increased by $12 million.

Full year ended December 31, 2015 versus full year ended December 31, 2014 – The segment achieved record EBITDA for the year.  EBITDA increased $445 million versus 2014, excluding a favorable $14 million year to year variance as a result of LCM inventory adjustments.  2014 benefited from a $52 million environmental settlement that was recognized in the first quarter of 2014.  Underlying olefin results increased approximately $25 million, as average feedstock price declines outweighed lower average product prices.  Combined polyolefin results increased approximately $420 million compared to the prior year driven by strong demand leading to 7% higher volume and improving margins. Polypropylene compounds and polybutene-1 were relatively unchanged.  Equity income from joint ventures increased by $54 million, driven by strong results from joint ventures in Poland and South Korea.

Intermediates and Derivatives (I&D) – The primary products of this segment include propylene oxide (PO) and its co-products (styrene monomer, tertiary butyl alcohol (TBA), isobutylene and tertiary butyl hydroperoxide), and derivatives (propylene glycol, propylene glycol ethers and butanediol); acetyls (including methanol), ethylene oxide and its derivatives, and oxyfuels.

Three months ended December 31, 2015 versus three months ended September 30, 2015 – EBITDA decreased $220 million versus the record third quarter 2015, excluding an unfavorable $28 million quarter to quarter variance as a result of LCM inventory adjustments.  Results for PO and PO derivatives decreased approximately $10 million.  Intermediate chemicals results decreased by approximately $160 million, primarily due to declines in styrene and methanol margins and decreased acetyl volumes due to our extended La Porte turnaround.  Oxyfuels results decreased approximately $60 million with typical seasonal margin declines.  Equity income from joint ventures improved by $2 million.

Three months ended December 31, 2015 versus three months ended December 31, 2014 – EBITDA decreased $78 million versus the fourth quarter 2014, excluding a favorable $19 million quarter to quarter variance as a result of LCM inventory adjustments.  Results for PO and PO derivatives improved by approximately $35 million.  Intermediate chemicals results decreased by approximately $60 million driven by lower acetyls results from lower methanol margins and lower acetyl volumes as a result of our 2015 La Porte turnaround.  Oxyfuels decreased approximately $55 million primarily as a result of unseasonably high margins during the fourth quarter of 2014.  Equity income from joint ventures increased by $1 million.

Full year ended December 31, 2015 versus full year ended December 31, 2014 – The segment achieved record EBITDA for 2015.  EBITDA increased $104 million versus 2014, excluding an unfavorable $88 million year to year variance as a result of LCM inventory adjustments.  PO and PO derivatives results increased approximately $40 million due to slightly higher volumes.  Intermediate chemicals results improved by approximately $120 million due to improved styrene margins that were partially offset by lower methanol and vinyl acetate margins.  Oxyfuels results declined by approximately $60 million compared to the prior year as strong octane spreads over butane and 15% higher volumes partially offset a decline in gasoline prices.  Equity income from joint ventures increased by $7 million.

Refining – The primary products of this segment include gasoline, diesel fuel, heating oil, jet fuel, and petrochemical raw materials.

Three months ended December 31, 2015 versus three months ended September 30, 2015 – EBITDA decreased $75 million versus the third quarter 2014, excluding an unfavorable $77 million quarter to quarter variance as a result of LCM inventory adjustments.  The Houston refinery operated at 206,000 barrels per day, down 43,000 barrels per day from the prior quarter due to unplanned repairs on several major units.  The Maya 2-1-1 industry benchmark crack spread decreased by $4.22 per barrel, averaging $18.55 per barrel. The cost of Renewable Identification Numbers (RINs) to meet U.S. renewable fuel standards increased by approximately $10 million versus the third quarter 2015.

Three months ended December 31, 2015 versus three months ended December 31, 2014 – EBITDA increased $35 million versus the fourth quarter 2014, excluding a favorable $217 million quarter to quarter variance as a result of LCM inventory adjustments.  Fourth quarter 2015 throughput was down by 60,000 barrels per day from the prior year period. The Maya 2-1-1 industry benchmark crack spread increased by $0.83 per barrel, averaging $18.55 per barrel.  Compared to the 2014 period, refinery margins decreased.  The cost of RINs was relatively unchanged relative to the fourth quarter 2014.

Full year ended December 31, 2015 versus full year ended December 31, 2014 – EBITDA increased $110 million versus 2014, excluding a favorable $167 million year to year variance as a result of LCM inventory adjustments.  Throughput at the Houston Refinery averaged 238,000 barrels per day, down 21,000 barrels per day. The Maya 2-1-1 industry benchmark crack spread decreased by $2.13 per barrel, averaging $22.30 per barrel. The refinery benefited from improved secondary product margins and higher Canadian crude volumes.  The cost of RINs was relatively unchanged in 2015 relative to 2014.

Technology Segment – The principal products of the Technology segment include polyolefin catalysts and production process technology licenses and related services.

Three months ended December 31, 2015 versus three months ended September 30, 2015 – EBITDA increased by $20 million driven by the timing of licensing revenue in the fourth quarter and favorable catalyst volumes.

Three months ended December 31, 2015 versus three months ended December 31, 2014 – EBITDA increased by $21 million due to higher catalyst volumes.

Full year ended December 31, 2015 versus full year ended December 31, 2014 – EBITDA exceeded 2014 by $11 million, improving to a record level.

Capital Spending and Cash Balances

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were $483 million during the fourth quarter 2015 and $1.4 billion for the full year 2015. Our cash and liquid investment balance was $2.4 billion at December 31, 2015. We repurchased 12.7 million ordinary shares during the fourth quarter 2015 and 51.8 million shares during 2015. There were 440 million common shares outstanding as of December 31, 2015.  The company paid dividends of $1.4 billion during 2015.