Income · Stocks to Consider and Updates

LyondellBasell Misses Forecasts; Outlook Positive

Chemical and oil refining giant LyondellBasell Industries (NYSE: LYB – $96.78) announced net income for the third quarter of $1.0 billion, equal to an adjusted $2.70 per share vs. $2.96 a year ago. Integration activities related to the acquisition of A. Schulman are on schedule and expected to generate approximately $125 million in forward annual run-rate synergies as of the close of the third quarter. After tax costs related to integration rose to $33 million for the period and impacted third quarter earnings by $0.10 per share. Sales fell to $8.72 billion from $9.05 billion a year earlier and missing the $8.88 billion mean estimate.

       Lyondell’s businesses continue to benefit from low-cost natural gas liquid feedstocks with favorable prices persisting into October.  Management expect to see typical seasonal softening of demand in the final months of the year.  Profitability at the company’s Houston refinery should begin to improve during the fourth quarter with increasing demand for low-sulfur marine fuels ahead of the IMO 2020 regulation deadline. Longer term, the A. Schulman acquisition ought to help drive the top and bottom lines higher and shares remain a candidate for income accounts willing to assume the risk inherent in the global chemical and refining businesses. The shares trading a new 52-week high, yield 4.3%.

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