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Commodity earnings buoyed by shale-advantaged feeds

2:59 PM MDT | May 12, 2014 | CW Staff

North American commodity producers have posted first-quarter results that reflect the continued benefit of shale-advantaged feedstocks, somewhat muted by the harsh winter.

“In the United States, our key raw materials continue to be in abundant supply with ethane tracking natural gas prices,” says Jim Gallogly, CEO of LyondellBasell Industries.

LyondellBasell reports net income up 5% year-on-year (YOY) on gains in Europe and Asia. Sales increased 4.4%. Earnings of $1.72/share missed the consensus estimate of $1.73/share reported by Thomson Reuters. “Although natural gas prices increased in the face of record winter temperatures, current pricing and the outlook have moderated, reflecting the strength of US shale developments,” Gallogly says.

Huntsman swung to a profit of $54 million versus net loss of $24 million in the year-ago quarter. Income of 43 cts/share beat analyst estimates by 3 cts as restructuring in the advanced materials and textile effects businesses and Ebitda gains boosted results.

Westlake Chemical reports net income increased 28% YOY on improved olefin margins and volumes. Earnings of $1.18/share beat the analyst estimates by 4 cts. Sales increased 19% YOY, the result of higher polyethylene and ethylene volumes, higher prices, and the contribution of the newly acquired specialty polyvinyl chloride pipe business.

Nova Chemicals reports a 32% YOY increase in net income on gains in the olefins and polyolefins business unit. Sales were up 10% YOY. Olefins and polyolefins generated operating profit of $377 million, up 12% YOY on higher margins in the polyethylene segment.

Methanex reports net income up 142% YOY and sales up by 48%. Adjusted earnings of $1.65/share fell well below the consensus estimate of $1.92/share on unplanned outages and gas curtailments. “Increased production resulting from our 2013 capacity growth initiatives in New Zealand and Medicine Hat, [AB,] together with higher methanol pricing, contributed to robust Ebitda and earnings results this quarter,” says John Floren, president and CEO.

OxyChem, the chemical segment of Occidental Petroleum, reports earnings down 14% YOY. Caustic soda prices fell, driven by new chlor-alkali capacity, but vinyls’ margins gained on improvement in US construction, and volumes rose for all products.

Results were mixed at the chemical operations of integrated oil companies. ExxonMobil reports a 7.9% YOY decline in earnings for its chemical segment—$90 million on weaker margins, $40 million on volume and mix, and $40 million for other reasons, ExxonMobil says. Prime product sales increased 3.7% YOY, to 6.1 million m.t., driven by increased Singapore production. US sales rose 1.2% YOY, to 2.4 million m.t., while non-US sales increased 5.3% YOY.

Phillips 66 reports that earnings for its chemical segment, a 50% share in Chevron Phillips Chemical, increased 20% YOY. The olefins and polyolefins business contributed $283 million, up 8% YOY on higher margins, offset by lower ethylene volumes.

Commodity earnings
(sales and net income in millions)
Company Sales Change* Net income Change*
ExxonMobil NA NA $1,000 -7.9%
LyondellBasell $11,100 4.4% 944 5
Phillips 66 NA NA 316 20
Huntsman 2,750 2 54 NM
Nova Chemicals 1,380 10 245 32
OxyChem 1,200 4 136 -14
Westlake 1,030 19 158 28
Methanex 968 48 145 142
Kraton Performance Polymers 312 -8 -7.9 NM
*Percent change from prior-year quarter. NA: Not available. NM: Not meaningful. Source: Company reports.

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