01—Abstract
Summary
Summary of the 10-K filed February 12, 2013. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V.
(NYSE: LYB) reported 2012 sales and other operating revenues of $45.35 billiona, down from $48.18 billion in 2011, with operating income of $4.68 billion versus $4.34 billion a year earlier and net income attributable to the Company shareholders of $2.85 billion. The filing attributes the revenue decline mainly to lower average product prices and weaker European demand, while operating income rose on strong U.S. ethylene performance from low-cost natural gas liquids and a high butane-to-gasoline spread that boosted oxyfuels results. Results were partly offset by a weak European olefins and polyolefins segment, which reported operating income of $127 million versus $435 million in 2011, and by $210 million in after-tax charges for early debt repayment.
Balance sheet and cash flow were strengthened during the year. Cash and cash equivalents rose to $2.73 billionb, and operating cash flow was $4.79 billion. The company refinanced nearly $3 billion of debt with 5% senior notes due 2019 and 5.75% senior notes due 2024, retired its 8% and 11% senior notes, and replaced its ABL facility with a $2.0 billion unsecured revolving credit facility, of which $1,949 million was available at year-end.
Cash dividends paid totaled $2.42 billionc, including a $2.75 per share special dividend, and the company stated its intent to keep paying quarterly dividends while increasing them over time. Key risks flagged in the filing include European economic weakness, commodity feedstock price volatility, cyclical oversupply in chemicals and refining, and an open U.S. Department of Justice inquiry under the Foreign Corrupt Practices Act relating to a former Kazakhstan project, for which the company said it could not reasonably estimate a liability range. The Houston refinery is the company's only refining operation.
02—Key points
Key Highlights
- Net sales and other operating revenues were $45.35 billion in 2012, down from $48.18 billion in 2011.
- Operating income rose to $4.68 billion from $4.34 billion, driven by strong U.S. ethylene performance and higher oxyfuels margins.
- Net income attributable to Company shareholders was $2.85 billion, with diluted earnings from continuing operations of $4.96 per share.
- The O&P-EAI segment's operating income fell to $127 million from $435 million, reflecting weak European demand and a Wesseling cracker turnaround.
- Cash and cash equivalents reached $2.73 billion, and operating cash flow was $4.79 billion.
- The company refinanced its debt with $3.0 billion of new senior notes and paid $2.42 billion in dividends, including a $2.75 per share special dividend.
- A U.S. DOJ inquiry under the FCPA relating to a former Kazakhstan project remains ongoing, with no estimate of potential liability given.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, LyondellBasell Industries kept $0.06.
- Revenue$45.35B100.0%
- Cost of revenue−$39.59B87.3%
- Gross profit$5.76B12.7%
- Operating costs−$1.08B2.4%
- Operating income$4.68B10.3%
- Interest, other & tax−$1.84B4.1%
- Net income$2.83B6.2%
Where FY2012 revenue went
$45.35B- Cost of revenue: $39.59B, 87% of revenue
- Net income: $2.83B, 6.2% of revenue
- R&D: $172.0M, 0.4% of revenue
- SG&A: $909.0M, 2.0% of revenue
- Interest, other & tax: $1.84B, 4.1% of revenue
Kept 6.2% as net incomeNet income $2.83B · 6.2%R&D $172.0M · 0.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 12, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $45.35B$48.18B | −5.9% |
| Cost of Revenue | $39.59B$42.73B | −7.3% |
| Gross Profit | $5.76B$5.45B | +5.6% |
| R&D Expenses | $172.00M$196.00M | −12.2% |
| SG&A Expenses | $909.00M$918.00M | −1.0% |
| Operating Expenses | $40.68B$43.85B | −7.2% |
| Operating Income | $4.68B$4.34B | +7.8% |
| Interest Expense | $655.00M$1.04B | −37.3% |
| Net Income | $2.83B$2.14B | +32.4% |
| EPS (Basic) | $4.97$3.76 | +32.2% |
| EPS (Diluted) | $4.92$3.74 | +31.6% |
05—Questions
Frequently Asked Questions
Why did revenue decline while operating income increased?
The filing states that revenues fell $2.83 billion, or 6%, mainly because lower average product prices, including lower NGL feedstock prices, and lower sales volumes reduced sales. Operating income increased $339 million to $4.68 billion, primarily because of strong ethylene performance in the O&P-Americas segment, where lower NGL feedstock costs improved margins, and higher oxyfuels margins in the I&D segment.
How did the European business perform in 2012?
The O&P-EAI segment's operating income declined to $127 million from $435 million. The filing attributes this to weak European economic conditions, lower cracker and butadiene margins, a turnaround at the Wesseling, Germany cracker, and $35 million of European restructuring charges, along with a $22 million impairment at the Wesseling LDPE plant following a reactor bay explosion.
What happened to the company's debt and dividend policy in 2012?
The company issued $2.0 billion of 5% senior notes due 2019 and $1.0 billion of 5.75% senior notes due 2024 and used the proceeds, with cash on hand, to repay its 8% and 11% senior notes, paying $294 million in premiums. Dividends totaling $4.20 per share were paid in 2012, including a $2.75 special dividend. The company said it intends to continue paying quarterly dividends and to increase them over time.
What are the main legal and compliance risks disclosed?
The filing discloses an FCPA compliance matter relating to a payment under an agreement for a former Kazakhstan project. The company has voluntarily disclosed the matter to the U.S. Department of Justice, is cooperating, and has engaged outside counsel under Audit Committee oversight. It states it cannot reasonably estimate a range of liability. Separately, Access Industries has demanded indemnity and $100 million in management fees, which the company disputes.
How concentrated is the company's refining exposure?
The Houston refinery is the company's only refining operation, with heavy, high-sulfur crude processing capacity of approximately 268,000 barrels per day on a calendar day basis. The filing notes that an outage there cannot be offset by increased production elsewhere, and the Berre refinery in France ceased operations in January 2012 and is reported as discontinued operations.
06—Continue