01—Abstract
Summary
Summary of the 10-K filed February 25, 2021. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V. reported 2020 net income of $1.43 billiona, down from $3.40 billion in 2019, on sales and other operating revenues of $27.75 billion versus $34.73 billion.
Operating income fell to $1.56 billionb from $4.12 billion, reflecting lower olefins, polyolefins, intermediates and derivatives, and refining margins, along with a $582 million non-cash impairment of the Houston refinery recognized in the third quarter of 2020. Cash from operating activities was $3.40 billion, and the company made capital expenditures of $1.95 billion, reduced from $2.69 billion in 2019 after postponing growth projects and maintenance during the pandemic. The company strengthened its liquidity during 2020 by issuing $2.0 billion and $3.9 billion of guaranteed notes, and it invested in new joint ventures, including a 50% stake in the Louisiana Joint Venture for $2 billion and a 50% interest in the Bora LyondellBasell complex in China for $472 million.
Total debt, including current maturities, stood at $15.96 billionc at year end, up from roughly $12.1 billion, and the company said it is prioritizing debt reduction and remains committed to its dividend, which was $4.20 per share in 2020. Its $2.5 billion revolving credit facility had $2.02 billion of unused availability at December 31, 2020.
The filing also flags forward-looking risks, including volatile feedstock and energy costs, the pandemic's effect on demand, and a February 2021 Gulf Coast cold-weather event that shut down the majority of the region's petrochemical and refining capacity for at least a week at many facilities. The Houston PO/TBA project is now expected to finish in the fourth quarter of 2022, with costs projected to rise 40% to 50% above the original $2.4 billiond estimate.
02—Key points
Key Highlights
- Net income fell to $1.43 billion in 2020 from $3.40 billion in 2019; diluted EPS from continuing operations was $4.25 versus $9.60.
- Sales and other operating revenues declined to $27.75 billion from $34.73 billion, with revenues down 20% year over year.
- A $582 million non-cash impairment charge on the Houston refinery in Q3 2020 drove operating income down to $1.56 billion from $4.12 billion.
- Operating cash flow was $3.40 billion in 2020, supported by a $900 million income tax refund, and capital expenditures were reduced to $1.95 billion from $2.69 billion.
- Total debt rose to $15.96 billion at year end, after the issuance of $3.9 billion and $2.0 billion of guaranteed notes that bolstered liquidity and funded the Louisiana Joint Venture purchase.
- Dividends of $4.20 per share were paid in 2020, and management said it is prioritizing debt reduction over share repurchases in the near term.
- Joint ventures in the U.S. Gulf Coast (50% of Louisiana Integrated PolyEthylene JV, $2 billion) and China (50% of Bora LyondellBasell, $472 million) expanded capacity, and a January 2021 agreement with Sinopec will build a PO/SM unit in China.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, LyondellBasell Industries kept $0.05.
- Revenue$27.75B100.0%
- Cost of revenue−$24.36B87.8%
- Gross profit$3.39B12.2%
- Operating costs−$1.83B6.6%
- Operating income$1.56B5.6%
- Interest, other & tax−$132.0M0.5%
- Net income$1.43B5.1%
Where FY2020 revenue went
$27.75B- Cost of revenue: $24.36B, 88% of revenue
- Net income: $1.43B, 5.1% of revenue
- R&D: $113.0M, 0.4% of revenue
- SG&A: $1.14B, 4.1% of revenue
- Other operating costs: $582.0M, 2.1% of revenue
Kept 5.1% as net incomeNet income $1.43B · 5.1%R&D $113.0M · 0.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 25, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $27.75B$34.73B | −20.1% |
| Cost of Revenue | $24.36B$29.30B | −16.9% |
| Gross Profit | $3.39B$5.43B | −37.4% |
| R&D Expenses | $113.00M$111.00M | +1.8% |
| SG&A Expenses | $1.14B$1.20B | −4.9% |
| Operating Expenses | $26.19B$30.61B | −14.4% |
| Operating Income | $1.56B$4.12B | −62.1% |
| Interest Expense | $526.00M$347.00M | +51.6% |
| Net Income | $1.43B$3.40B | −58.0% |
| EPS (Basic) | $4.24$9.59 | −55.8% |
| EPS (Diluted) | $4.24$9.58 | −55.7% |
05—Questions
Frequently Asked Questions
Why did LyondellBasell's earnings decline so sharply in 2020?
Net income fell to $1.43 billion from $3.40 billion as revenues dropped 20% on lower average sales prices tied to crude oil, which decreased in 2020. Operating income was also hit by the $582 million Houston refinery impairment, and lower margins in the olefins, polyolefins, intermediates and derivatives, and refining segments reduced EBITDA across the company.
How much debt does LyondellBasell carry, and how has it changed?
Total debt, including current maturities, was $15.96 billion at December 31, 2020, compared with long-term debt of $11.62 billion and short-term debt of $445 million at year-end 2019. The increase came from the issuance of guaranteed notes in April and October 2020, used for liquidity and to fund the Louisiana Joint Venture purchase. The company stated that it is prioritizing debt reduction and that it was in compliance with its debt covenants at year end.
What is the status of the Houston PO/TBA plant project?
The project is approximately 50% complete and is expected to be finished in the fourth quarter of 2022, about one year later than originally estimated. Higher costs from COVID-19 delays, more extensive civil construction and unexpected tariffs are expected to add approximately 40% to 50% to the original $2.4 billion cost estimate.
Does the company plan to keep paying its dividend?
The company stated its intent to continue declaring and paying quarterly dividends, with the goal of increasing the dividend over time, after considering its cash balances and expected results. Dividends paid in 2020 totaled $1.41 billion, or $4.20 per share. Future dividends are subject to Dutch law and board discretion.
What was the impact of the February 2021 Gulf Coast weather event?
Unusually cold temperatures and power outages in February 2021 led to shutdowns of the majority of petrochemical and refining capacity along the U.S. Gulf Coast, including LyondellBasell's facilities in the region. The majority of its capacity in the region was down for at least one week, and the company was still assessing the impact and developing restart timelines when the filing was made.
06—Continue