01—Abstract
Summary
Summary of the 10-K filed February 17, 2017. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V.
(LYB) reported 2016 results in its Form 10-K filed February 17, 2017. Revenues fell to $29.18 billiona from $32.74 billion in 2015, and operating income declined to $5.06 billion from $6.12 billion. Net income attributable to the Company shareholders was $3.84 billion, compared with $4.48 billion in 2015.
Management described 2016 earnings as good despite a heavy maintenance schedule and several operational upsets at the Houston refinery. Olefins and Polyolefins—Americas operating income fell to $2.39 billion, while O&P—EAI rose to $1.49 billionb. Refining posted an operating loss of $99 million, reflecting lower margins and reduced crude processing rates.
Cash generated from operating activities was $5.61 billionc, and the company returned capital to shareholders through $2.94 billion of share repurchases and $1.40 billion of dividends paid. Total debt, including current maturities, was $8.98 billion at year-end, and the company had $2.71 billion of unused credit facility availability. Capital expenditures were $2.24 billion in 2016, and management expects approximately $2 billion in 2017 spending.
The filing states that the industry outlook for 2017 has steadily improved, citing healthy economic activity, ethylene project delays, and more favorable crude oil prices and NGL supply. Key risks highlighted include feedstock price volatility, the dependence of the Houston refinery as the company's only refining operation, cyclical oversupply in chemicals and refining, and exposure to euro-denominated assets and international operations. The filing also discloses a pension deficit of $942 milliond and potential IRS Section 409A exposure of up to $170 million tied to executive stock options.
02—Key points
Key Highlights
- Revenues declined to $29,183 million in 2016 from $32,735 million in 2015, driven mainly by lower average sales prices tied to crude oil and feedstock declines.
- Operating income was $5,060 million in 2016 versus $6,122 million in 2015, and net income attributable to shareholders was $3,836 million versus $4,476 million.
- Refining segment EBITDA fell to $72 million from $342 million, with an operating loss of $99 million, due to unplanned outages and lower heavy crude processing rates at the Houston refinery.
- O&P—EAI operating income rose to $1,494 million from $1,309 million, while O&P—Americas operating income declined to $2,393 million from $3,256 million.
- The company repurchased 36.6 million ordinary shares for $2,914 million in 2016 and paid $1,395 million in dividends, with dividends declared of $3.33 per share.
- Operating cash flow was $5,606 million, and capital expenditures were $2,243 million, with 2017 capital spending expected at approximately $2 billion.
- Total debt including current maturities was $8,981 million at December 31, 2016, with $2,710 million of total unused credit facility availability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, LyondellBasell Industries kept $0.13.
- Revenue$29.18B100.0%
- Cost of revenue−$23.19B79.5%
- Gross profit$5.99B20.5%
- Operating costs−$932.0M3.2%
- Operating income$5.06B17.3%
- Interest, other & tax−$1.22B4.2%
- Net income$3.84B13.1%
Where FY2016 revenue went
$29.18B- Cost of revenue: $23.19B, 79% of revenue
- Net income: $3.84B, 13% of revenue
- R&D: $99.0M, 0.3% of revenue
- SG&A: $833.0M, 2.9% of revenue
- Interest, other & tax: $1.22B, 4.2% of revenue
Kept 13% as net incomeNet income $3.84B · 13%R&D $99.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 17, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $29.18B$32.73B | −10.9% |
| Cost of Revenue | $23.19B$25.68B | −9.7% |
| Gross Profit | $5.99B$7.05B | −15.0% |
| R&D Expenses | $99.00M$102.00M | −2.9% |
| SG&A Expenses | $833.00M$828.00M | +0.6% |
| Operating Expenses | $24.12B$26.61B | −9.4% |
| Operating Income | $5.06B$6.12B | −17.3% |
| Interest Expense | $322.00M$310.00M | +3.9% |
| Net Income | $3.84B$4.47B | −14.2% |
| EPS (Basic) | $9.15$9.62 | −4.9% |
| EPS (Diluted) | $9.13$9.59 | −4.8% |
05—Questions
Frequently Asked Questions
How did LyondellBasell's profitability change in 2016?
Operating income fell to $5,060 million from $6,122 million, and net income attributable to the Company shareholders fell to $3,836 million from $4,476 million. The filing attributes the decline mainly to lower Americas olefins and polyethylene margins, a weaker Refining segment, and lower I&D margins, partly offset by stronger European polyolefin results.
What drove the weakness in the Refining segment?
Refining EBITDA fell to $72 million from $342 million. The filing cites lower margins from the decline in crude oil prices, several unplanned outages including a coker unit fire, utility interruptions, and planned turnaround activity. Heavy crude processing rates fell to 201 thousand barrels per day from 238 thousand in 2015.
How much cash did the company return to shareholders in 2016?
The company paid $2,938 million in share repurchases and $1,395 million in dividends during 2016. The May 2016 authorization covered up to an additional 10% of outstanding shares, and as of February 14, 2017, approximately 20 million shares remained under the current authorization.
What are the main risks the filing identifies for investors?
The filing highlights volatility in raw material and energy costs tied to crude oil and natural gas, reliance on the Houston refinery as the only refining operation, cyclical oversupply in chemicals and refining, international exposure including euro-denominated assets, and a pension plan deficit of $942 million. It also notes potential Section 409A tax exposure of up to $170 million related to executive stock options.
06—Continue