Chemical and oil refining giant LyondellBasell Industries (NYSE: LYB – $110.00) reported second-quarter earnings that topped expectations, boosted by strong results from its intermediates and derivatives and technology segments. For the quarter the company reported a profit of $1.65 billion up from $1.13 billion a year earlier. On an adjusted basis, excluding the impact of a non-cash tax settlement, the company reported earnings of $3.34 a share compared to adjusted EPS of $2.81 last year. Analysts were expecting $2.92 a share, Revenue surged 21.5% to $10.21 billion, topping analysts’ expectations of $9.4 billion. LyondellBasell said its increased polyethylene capacity is being absorbed by strong demand. Over the coming quarters, the company is poised to drive earnings growth with strong performance in its Intermediates and Derivatives segment, operational and market improvements in refining, the acquisition of A. Schulman later this year, the start-up of the Hyperzone HDPE plant in 2019 and increased profitability in the company’s refinery from the impact of new marine fuel regulations in the latter half of next year.
The shares of LYB are worth a look for income investors willing to ride the cyclical chemicals market. Lyondell’s mammoth cash flow generating ability all but guarantees share buybacks, dividend hikes and further acquisitions. Full-year earnings should be around $11.23 per share compared to $10.07 for all of 2017. And the 3.7% dividend yield adds to its appeal.