01—Abstract
Summary
Summary of the 10-K filed February 20, 2014. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V.
(NYSE: LYB) reported 2013 sales and other operating revenues of $44.06 billiona, down from $45.35 billion in 2012, while operating income rose to $5.10 billion from $4.68 billion and net income attributable to the Company shareholders was $3.86 billion, or $6.75 per diluted share. The filing attributes the improvement mainly to continued benefits from low-cost U.S. natural gas and natural gas liquids, increased LPG cracking in Europe and a $353 million tax benefit from the release of valuation allowances tied to French tax losses. Lower refining margins and a decline in Houston refinery crude processing rates, largely from turnaround activity, weighed on the Refining segment, which fell to $22 million of operating income from $334 million.
The balance sheet strengthened, with cash and cash equivalents of $4.45 billionb at year-end 2013 versus $2.73 billion a year earlier, and total debt of $5.84 billion. Operating cash flow was $4.84 billion. The company repurchased 27.4 million ordinary shares for $1.95 billion under a program authorized in May 2013, paid dividends of $1.13 billion, and issued $1.5 billion of notes through LYB International Finance B.V.
Its credit rating was raised to investment grade by Moody's and Standard & Poor's, and it migrated its tax residency to the United Kingdom effective July 1, 2013. Looking ahead, the filing states that olefins in North America should continue to benefit from cost-advantaged NGLs, that a La Porte, Texas olefins turnaround begins late in the first quarter of 2014, and that the Channelview methanol plant restart supports the I&D segment.
The company expects its refining position to strengthen in 2014 as North American crude production grows. Ethylene expansions at La Porte (2014) and Channelview and Corpus Christi (2015) are projected to add about 1.85 billion pounds per year of capacity.
02—Key points
Key Highlights
- Revenues of $44.06 billion in 2013 versus $45.35 billion in 2012; operating income rose to $5.10 billion from $4.68 billion.
- Net income attributable to Company shareholders of $3.86 billion, or $6.75 per diluted share, in 2013 versus $4.92 per diluted share in 2012.
- O&P-Americas operating income increased to $3.25 billion from $2.65 billion, driven by lower NGL-based feedstock costs and higher olefins and polyethylene margins.
- Refining operating income fell to $22 million from $334 million, reflecting lower refining margins and a 9% decline in crude processing rates tied to turnarounds and unplanned maintenance.
- Cash and cash equivalents rose to $4.45 billion; the company repurchased $1.95 billion of shares and paid $1.13 billion in dividends in 2013.
- Credit rating raised to investment grade by Moody's and Standard & Poor's; $1.5 billion of notes issued by LYB International Finance B.V. in July 2013.
- Ethylene expansions at La Porte, Channelview and Corpus Christi are expected to add about 1.85 billion pounds per year of capacity, with completion in 2014 and 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, LyondellBasell Industries kept $0.09.
- Revenue$44.06B100.0%
- Cost of revenue−$37.94B86.1%
- Gross profit$6.12B13.9%
- Operating costs−$1.02B2.3%
- Operating income$5.10B11.6%
- Interest, other & tax−$1.25B2.8%
- Net income$3.85B8.7%
Where FY2013 revenue went
$44.06B- Cost of revenue: $37.94B, 86% of revenue
- Net income: $3.85B, 8.7% of revenue
- R&D: $150.0M, 0.3% of revenue
- SG&A: $870.0M, 2.0% of revenue
- Interest, other & tax: $1.25B, 2.8% of revenue
Kept 8.7% as net incomeNet income $3.85B · 8.7%R&D $150.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 20, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $44.06B$45.35B | −2.8% |
| Cost of Revenue | $37.94B$39.59B | −4.2% |
| Gross Profit | $6.12B$5.76B | +6.3% |
| R&D Expenses | $150.00M$172.00M | −12.8% |
| SG&A Expenses | $870.00M$909.00M | −4.3% |
| Operating Expenses | $38.96B$40.68B | −4.2% |
| Operating Income | $5.10B$4.68B | +9.1% |
| Interest Expense | $309.00M$655.00M | −52.8% |
| Net Income | $3.85B$2.83B | +36.0% |
| EPS (Basic) | $6.80$4.97 | +36.8% |
| EPS (Diluted) | $6.75$4.92 | +37.2% |
05—Questions
Frequently Asked Questions
How did LyondellBasell's profitability change in 2013?
Operating income increased to $5.10 billion in 2013 from $4.68 billion in 2012, even though revenues declined 3% to $44.06 billion. Net income attributable to Company shareholders was $3.86 billion, or $6.75 per diluted share, compared with $4.92 per diluted share in 2012. The filing notes that a $353 million benefit from releasing valuation allowances on French tax losses contributed to the result.
Which segments drove the results?
The O&P-Americas segment was the main driver, with operating income of $3.25 billion versus $2.65 billion, reflecting a shift to lower-cost NGL feedstocks and higher olefins and polyethylene margins. O&P-EAI operating income rose to $377 million from $127 million. Refining was the weak spot, with operating income of $22 million versus $334 million, due to lower margins and reduced crude processing.
How is the company returning cash to shareholders?
During 2013 the company repurchased 27,359,002 ordinary shares for approximately $1.95 billion under a program announced in May 2013 covering up to 10% of shares outstanding through May 21, 2014. Dividends declared totaled $2.00 per share, or $1.13 billion in aggregate, with quarterly dividends rising from $0.40 to $0.60 during the year. As of February 18, 2014, about 26.7 million shares remained under the current authorization.
What is the company's balance sheet and liquidity position?
At December 31, 2013, cash and cash equivalents were $4.45 billion, of which $1.53 billion was held outside the U.S., and total debt including current maturities was $5.84 billion. Unused availability under credit facilities was $3.47 billion, including $2.0 billion under the revolving credit facility. Operating cash flow was $4.84 billion in 2013. Pension plans were underfunded by $668 million at year-end.
What does management expect for 2014?
Management said North American olefins should continue to benefit from strong margins on cost-advantaged NGLs, though weather-related increases in natural gas and NGL prices seen in early 2014 were viewed as temporary. A La Porte olefins turnaround begins late in the first quarter of 2014. Management expects its refining position to strengthen in 2014 as North American crude production grows and delivery infrastructure expands, and it expects European olefin and polyolefin demand to improve in the first quarter of 2014.
06—Continue