Netherlands’s LyondellBasell Industries N.V (NYSE: LYB – $88.89) – one of the largest plastics, chemicals and refining companies in the world, announced net income for the fourth quarter of $0.7 billion. On an adjusted basis, LYB reported $1.83 per share compared to $2.73 last year and $0.43 below Street projections. Revenue for the quarter was $8.876 billion compared to $9.135 billion a year ago and well-below Street projections of $9.135 billion. Full-year revenue was $39.004 billion compared to 2017’s $34.484. Results for the fourth quarter. according to management, were affected by the extraordinary fall in the price of crude oil, unusual operational events and a very difficult refining market. As oil prices fell by 40% during the fourth quarter, non-U.S. Olefins and Polyolefins business experienced declining demand as customers delayed orders and de-stocked inventories in expectations of lower pricing.
The late 2018 stock price drop, however, has lent the issue worthwhile total return potential over long haul. Sales and earnings should be fueled by the flagship Olefins & Polyolefins (Americas) and the Intermediates & Derivatives units. The Schulman acquisition should also permit Lyondell to create the critical mass it needs to survive in this cyclical environment. I believe the company should be able to jump-start its top line by having a much larger advanced polymer solutions business with far-greater geographical reach. Positions, however, are not for the risk-averse but are being retained in the income portfolio for now thanks to its well-covered and growing $4.00 per share payout, yielding 4.5%, reasonable valuation and potential share price recovery.