01—Abstract
Summary
Summary of the 10-K filed February 17, 2015. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V. reported record earnings for 2014 despite a large inventory charge.
Revenues were $45.61 billiona in 2014, up from $44.06 billion in 2013, and operating income rose to $5.74 billion from $5.10 billion. Results absorbed a $760 million pretax lower of cost or market (LCM) inventory valuation charge ($483 million after tax) recognized in the third and fourth quarters, driven by a decline in crude oil and correlated product prices. Net income attributable to Company shareholders was $4.17 billion, or $7.99 diluted EPS.
EBITDA reached $7.05 billionb across segments, with O&P—Americas at $3.91 billion and O&P—EAI at $1.37 billion, while Refining fell to $65 million after its $344 million LCM charge. Cash flow from operations was $6.05 billion. The company returned substantial capital to shareholders, repurchasing $5.79 billion of shares and paying $1.40 billion in dividends, and declared $2.70 per share in dividends for 2014 versus $2.00 in 2013.
Total debt stood at $7.11 billionc at year-end, and cash and cash equivalents fell to $1.03 billion from $4.45 billion, with an additional $1.59 billion in short-term investments. Management said it expects North American margins to be lower in 2015 as the NGL advantage narrows, that further LCM charges are likely in the first quarter of 2015 if crude prices remain depressed, and that it is reevaluating the planned Gulf Coast polyethylene facility.
The filing also highlights growth investments, including a 800 million pound ethylene expansion completed at La Porte, Texas, and planned ethylene and PO/TBA projects, along with a strike at the Houston refinery that began when the United Steelworkers contract expired on February 1, 2015. The company's pension plans carried a $953 milliond projected benefit obligation deficit at year-end 2014.
02—Key points
Key Highlights
- Revenues rose to $45.61 billion in 2014 from $44.06 billion in 2013, a $1.55 billion increase.
- Operating income of $5.74 billion included a $760 million pretax LCM inventory charge ($483 million after tax); Refining's share was $344 million.
- Net income attributable to shareholders was $4.17 billion, with diluted EPS of $7.99 for the year.
- Operating cash flow was $6.05 billion, while the company repurchased $5.79 billion of shares and paid $1.40 billion in dividends.
- Dividends declared rose to $2.70 per share in 2014 from $2.00 in 2013, and interim quarterly dividends increased from $0.60 to $0.70.
- Cash and cash equivalents fell to $1.03 billion from $4.45 billion, while short-term investments of $1.59 billion were added; total debt was $7.11 billion.
- Management expects lower North American olefins and polymers margins in 2015 and further LCM charges in Q1 2015 if crude oil prices stay depressed.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, LyondellBasell Industries kept $0.09.
- Revenue$45.61B100.0%
- Cost of revenue−$38.94B85.4%
- Gross profit$6.67B14.6%
- Operating costs−$933.0M2.0%
- Operating income$5.74B12.6%
- Interest, other & tax−$1.57B3.4%
- Net income$4.17B9.1%
Where FY2014 revenue went
$45.61B- Cost of revenue: $38.94B, 85% of revenue
- Net income: $4.17B, 9.1% of revenue
- R&D: $127.0M, 0.3% of revenue
- SG&A: $806.0M, 1.8% of revenue
- Interest, other & tax: $1.57B, 3.4% of revenue
Kept 9.1% as net incomeNet income $4.17B · 9.1%R&D $127.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 17, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $45.61B$44.06B | +3.5% |
| Cost of Revenue | $38.94B$37.94B | +2.6% |
| Gross Profit | $6.67B$6.12B | +8.9% |
| R&D Expenses | $127.00M$150.00M | −15.3% |
| SG&A Expenses | $806.00M$870.00M | −7.4% |
| Operating Expenses | $39.87B$38.96B | +2.3% |
| Operating Income | $5.74B$5.10B | +12.4% |
| Interest Expense | $352.00M$309.00M | +13.9% |
| Net Income | $4.17B$3.85B | +8.2% |
| EPS (Basic) | $8.03$6.80 | +18.1% |
| EPS (Diluted) | $7.99$6.75 | +18.4% |
05—Questions
Frequently Asked Questions
What drove the decline in Refining segment EBITDA in 2014?
Refining EBITDA fell to $65 million from $182 million in 2013, primarily because of a year-end non-cash LCM inventory charge of $344 million, which reflected a near $50 per barrel decline in crude oil prices since the third quarter of 2014. Excluding this charge, segment EBITDA rose on improved refining margins, higher operating rates, and lower RINs costs.
How much did the company return to shareholders in 2014?
The company made share repurchases totaling $5.79 billion and paid dividends of $1.40 billion. It purchased 63.3 million ordinary shares during 2014 and, as of February 13, 2015, had about 10 million shares remaining under its April 2014 authorization.
What is the company's exposure to pension funding?
At December 31, 2014, the projected benefit obligation for pension plans exceeded the fair value of plan assets by $953 million, which the company will be required to fund, with interest, in future years. Pension contributions were $94 million in 2014 and are estimated at $43 million for U.S. plans and $74 million for non-U.S. plans in 2015.
What labor issue affected the Houston refinery?
The collective bargaining agreement with the United Steelworkers covering about 55% of the company's unionized North American employees, all at the Houston refinery, expired February 1, 2015. The union called employees to strike immediately before expiration, and the company said it remains committed to negotiating in good faith.
06—Continue