LyondellBasell Industries NV has reported $714 million in net income for the second quarter, up $242 million against the prior-three month period but down more than two times that of the second quarter last year.
Costs associated with the chemical and fuel maker’s plan to exit the petroleum refining sector dragged down earnings, while refining margins also weakened. Results for the April-June period were buoyed by lower throughput costs and higher production volumes.
“Global olefins and polyolefins margins improved modestly during the second quarter driven by lower feedstock costs in both the U.S. and Europe”, the Dutch company said in a press release.
“New capacity from the start of LyondellBasell’s propylene oxide and oxyfuels plant in Texas was largely offset by planned maintenance at the company’s existing assets.
“Oxyfuels margins remained strong, supported by low butane costs and robust demand for fuels. Refining margins declined from first quarter 2023 highs but remained above long-term averages.”
LyondellBasell, which also manufactures polymers, posted a negative impact of $86 million “related to costs incurred from plans to exit the refining business”. That adds up to $182 million in refinery exit costs for the first half of 2023.
It said earlier it was delaying its refining exit from yearend 2023 to March 2025 at the latest. The exit, announced April 21, 2022, had meant ceasing operation at its Texas state refinery, which can process up to 268,000 barrels of crude oil per day into transport fuels, lubricants and other products. But on May 31, 2023, LyondellBasell said it instead plans to transform the 700-acre Houston city facility for its expansion in the circular and low carbon sector.
“Favorable inspections and consistent performance have given the company confidence to continue safe and reliable operations at the Houston site”, it said. “LyondellBasell anticipates moderate maintenance spend to support this extension in 2023 and 2024 but remains committed to ceasing operation of its oil refining business.
“The extension will minimize workforce impacts as the company continues to develop future options for the site and will enable a smoother transition between the shutdown and the implementation of the retrofitting and circular projects.
“One of the three pillars of the company’s new strategy is to build a profitable Circular and Low Carbon Solutions business. In support of this strategy, LyondellBasell is developing future plans for the Houston refining site.”
LyondellBasell added, “Multiple options are being evaluated including recycled and renewable-based feedstocks and green and blue hydrogen”.
Transformation is planned to start 2025.
When it announced the exit last year LyondellBasell said the refinery cessation advances its decarbonization goals. It has set a target of achieving net zero greenhouse gas emissions from its global operations by 2050 with a short-term goal of curbing Scope 1 and Scope 2 emissions by 42 percent by 2030.
LyondellBasell ended the first half of 2023 with $2.494 billion in cash assets, with a generation of $1.772 billion net from operating activities. It reported current debt maturities of $1.206 billion.
“In the third quarter, the company expects typical benefits from summer seasonality to be more than offset by soft demand due to ongoing economic uncertainty”, it said. ” Stagnant demand, volatile feedstock costs and new capacity in North America and China are challenging petrochemical margins.
“Summer demand for transportation fuels continues to support attractive oxyfuels and refining margins.”
LyondellBasell distributed $508 million to shareholders for the second quarter, comprising $408 million in dividends and $100 million in stock repurchases.
Dividends per common share for the second quarter was $1.25, compared to a net profit per common share of $2.18 both basic and diluted. Dividends for the second quarter was raised five percent against the first quarter.
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