Chemicals major LyondellBasell Friday reported third quarter net income of $851 million down $61 million or 7% from the $912 million for the same quarter last year, on weaker sales and charges.
The declines in both sales and margins were most marked in Europe, where the economic slump as a result of the eurozone crisis during the period has been more pronounced.
The company pointed to the impact of a $71 million non-cash lowering of cost or market inventory adjustment which offset the prior quarter LCM inventory valuation charge, as a negative factor in the results.
Third quarter 2012 sales fell $1.2 billion or 10% to $11.3 billion, down from $12.5 billion.
In the Americas region, Q3 operating income rose by $140 million to $738 million compared to $598 million in Q3 2011 while EBIDTA increased $148 million in the third quarter 2012 versus the third quarter 2011.
In Europe, Q3 operating income shrank by $115 million to $15 million from $130 million in Q3 2011, while EBITDA slumped $172 million to $75 million versus the third quarter 2011 of $247 million, primarily due to lower margins.
In addition, LyondellBasell pointed to lower production in the third quarter 2012 versus the corresponding period in 2011 due to a turnaround at its Wesseling, Germany cracker.
On the other hand, the company reported a Q3 2012 rise of $56 million in European intermediates and derivatives operating income to $424 million compared to $368 million in Q3 2011, while EBITDA increased by $58 million to $475 million, up from $417 million in the same period.
"During the third quarter, our segments generally performed well, and results were consistent with their specific business environments and geographic exposures. Our olefins and polyolefins business in North America continues to provide excellent results. In addition to stable NGL price trends throughout the third quarter, our olefins plants utilization exceeded 100% of nameplate capacity," said Jim Gallogly, LyondellBasell CEO.
"The olefins and polyolefins segment results for Europe, Asia and International regions reflected weak European economic conditions; however, polyolefin sales volumes improved versus the second quarter. Our Intermediates and Derivatives business continues to demonstrate steady performance with exceptional third-quarter oxyfuels results," Gallogly said.
"Our previously announced growth projects remain on schedule. We have initiated a review of additional olefins debottleneck projects targeted to capitalize on the advantage of favorable North American NGL prices," Gallogly indicated," Gallogly added.
