01—Abstract
Summary
Summary of the 10-K filed February 16, 2016. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V.
(LYB) reported record 2015 earnings in its annual report, with net income of $4.47 billiona on sales and other operating revenues of $32.74 billion, down from $45.61 billion in 2014. Diluted earnings per share from continuing operations were $9.60, compared with $8.00 in 2014. Results were supported by lower feedstock costs, stronger European polyolefins margins and improved refining margins, but were offset by lower olefins margins in the Americas and by lower-of-cost-or-market inventory charges totaling $548 million pretax in 2015 (and $760 million in 2014).
Operating income was $6.12 billionb, up from $5.74 billion. Cash flow from operations was $5.84 billion in 2015, and the company returned substantial capital to shareholders: it repurchased 51.8 million shares for $4.62 billion and paid $1.41 billion in dividends, with dividends declared at $3.04 per share. Total debt, including current maturities, was $8.03 billion at year end, and cash, cash equivalents and short-term investments totaled $1.99 billion.
The company also cited $1.63 billionc of unused availability under its $2.0 billion revolving credit facility. Management's outlook for early 2016 points to lower ethylene margins for the Americas on an NGL basis, healthy polyolefins margins in the U.S. and Europe, and planned maintenance at the Houston refinery expected to reduce first-quarter results by $40 million. Capital expenditures are planned at $1.83 billion for 2016, up from $1.44 billion in 2015, with the Corpus Christi ethylene expansion scheduled for completion in the second quarter of 2016.
02—Key points
Key Highlights
- Net income of $4,474 million in 2015, versus $4,168 million in 2014; diluted EPS from continuing operations of $9.60 versus $8.00.
- Sales and other operating revenues fell to $32,735 million from $45,608 million, with the filing attributing the decline primarily to lower crude oil and feedstock prices.
- Operating income rose to $6,122 million from $5,736 million despite $548 million of pretax lower-of-cost-or-market inventory charges.
- Cash provided by operating activities was $5,842 million, and repurchases of ordinary shares totaled $4,656 million in cash paid.
- Dividends declared were $3.04 per share for 2015, up from $2.70 in 2014, and the interim quarterly dividend was raised from $0.70 to $0.78.
- Total debt was $8,028 million at December 31, 2015, including $323 million of commercial paper outstanding.
- The Houston refinery, the company's only refining operation, processed about 243,000 barrels per day in 2015 and faced unplanned maintenance outages in late 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, LyondellBasell Industries kept $0.14.
- Revenue$32.73B100.0%
- Cost of revenue−$25.68B78.5%
- Gross profit$7.05B21.5%
- Operating costs−$930.0M2.8%
- Operating income$6.12B18.7%
- Interest, other & tax−$1.65B5.0%
- Net income$4.47B13.7%
Where FY2015 revenue went
$32.73B- Cost of revenue: $25.68B, 78% of revenue
- Net income: $4.47B, 14% of revenue
- R&D: $102.0M, 0.3% of revenue
- SG&A: $828.0M, 2.5% of revenue
- Interest, other & tax: $1.65B, 5.0% of revenue
Kept 14% as net incomeR&D $102.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 16, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $32.73B$45.61B | −28.2% |
| Cost of Revenue | $25.68B$38.94B | −34.0% |
| Gross Profit | $7.05B$6.67B | +5.7% |
| R&D Expenses | $102.00M$127.00M | −19.7% |
| SG&A Expenses | $828.00M$806.00M | +2.7% |
| Operating Expenses | $26.61B$39.87B | −33.3% |
| Operating Income | $6.12B$5.74B | +6.7% |
| Interest Expense | $310.00M$352.00M | −11.9% |
| Net Income | $4.47B$4.17B | +7.3% |
| EPS (Basic) | $9.62$8.03 | +19.8% |
| EPS (Diluted) | $9.59$7.99 | +20.0% |
05—Questions
Frequently Asked Questions
What drove the decline in revenue while earnings increased?
The filing states that lower average sales prices, driven mainly by the decline in crude oil and other feedstock prices, were responsible for most of the revenue decline, with unfavorable euro translation further reducing revenues by 5%. Earnings improved because lower feedstock costs widened margins, particularly in European polyolefins and olefins and in refining, which offset weaker U.S. olefins margins.
How much did the company return to shareholders in 2015?
The company made cash payments of $4,656 million to repurchase ordinary shares and paid $1,410 million in dividends. The share repurchase program authorized in May 2015 allowed purchases of up to an additional 10% of outstanding shares through November 2016, and about 7 million shares remained under the authorization as of February 11, 2016.
What were the main inventory-related charges and how might they affect 2016?
The company recorded pretax lower-of-cost-or-market inventory valuation charges of $548 million in 2015, compared with $760 million in 2014. The filing notes that further sustained price declines could result in additional charges during 2016, and that $3.3 billion of the $4.1 billion total inventory was considered at risk for further adjustment at year end.
What is the company's near-term capital spending plan and outlook?
The company planned capital expenditures of $1,833 million for 2016, compared with $1,440 million in 2015. The largest increase is in the O&P-Americas segment, including the Corpus Christi ethylene expansion. Management expects lower ethylene margins for the Americas on an NGL basis, healthy polyolefins margins in the U.S. and Europe, and a $40 million negative impact on first-quarter refining results from planned maintenance.
What is the company's debt and liquidity position?
At December 31, 2015, total debt including current maturities was $8,028 million, and the company had $1,988 million of unrestricted cash, cash equivalents and short-term investments. The filing lists total unused credit availability of $2,862 million, including $1,631 million under the $2,000 million revolving credit facility, and management believes these resources are sufficient to meet anticipated requirements.
06—Continue