EPS of $1.76 decreased by 22.7% from previous year
Gross margin of 12.0%
Net income of 570.00M
""In this unpredictable environment, we remain committed to driving operational excellence and optimizing our production capabilities to better serve our clients."" - CEO
LyondellBasell Industries NV reported a revenue of $10.32 billion for Q3 2024, representing a decline of 2.85% year-over-year (YoY) and 2.24% quarter-over-quarter (QoQ). This decrease is primarily attributed to reduced demand in key sectors and high raw material costs affecting margins. Net income fell sharply to $570 million, a decline of 23.49% YoY and a staggering 38.24% QoQ. Despite facing headwinds, management remains focused on operational efficiencies and cost control strategies that aim to stabilize revenues going forward.
The earnings call revealed that while the macroeconomic backdrop remains challenging, there are indications of stabilization in demand patterns towards the end of the quarter. The board emphasized the importance of the aggressive cost-cutting initiatives implemented in response to inflationary pressures and supply chain disruptions, showcasing resilience amid volatile market conditions.
Key Performance Indicators
Revenue
10.32B
QoQ: -2.24% | YoY:-2.85%
Gross Profit
1.24B
12.03% margin
QoQ: -11.91% | YoY:-14.23%
Operating Income
802.00M
QoQ: -17.32% | YoY:-20.91%
Net Income
570.00M
QoQ: -38.24% | YoY:-23.49%
EPS
1.77
QoQ: -37.23% | YoY:-22.71%
Revenue Trend
Margin Analysis
Key Insights
**Gross Profit**: $1.24 billion, down 14.23% YoY and 11.91% QoQ, with a gross profit margin of 12.03%. The margin compression highlights the impact of increased input costs.
- **Operating Income**: $802 million, representing a decline of 20.91% YoY and 17.32% QoQ, with an operating margin of 7.8%.
- **Net Income**: Reported at $570 million, down 23.49% YoY and 38.24% QoQ, translating to an earnings per share (EPS) of $1.77, reflecting a decrease of 22.71% YoY and 37.23% QoQ.
**Free Cash Flow**: Generated $302 million, showcasing the company’s ability to generate liquidity despite declining earnings.
- **Cash Position**: $2.62 billion in cash and cash equivalents, providing a solid buffer amidst market uncertainties. The current ratio is at 2.13, indicating robust short-term liquidity, while long-term debt stands at $12.49 billion, representing a debt-to-equity ratio of approximately 0.82.
Financial Highlights
### Key Financial Metrics
1. Revenue Performance: LyondellBasell generated $10.32 billion in revenue, down 2.85% YoY and 2.24% QoQ. This decline was driven by lower volumes and heightened competition within the industrial materials sector.
2. Profitability Metrics:
- Gross Profit: $1.24 billion, down 14.23% YoY and 11.91% QoQ, with a gross profit margin of 12.03%. The margin compression highlights the impact of increased input costs.
- Operating Income: $802 million, representing a decline of 20.91% YoY and 17.32% QoQ, with an operating margin of 7.8%.
- Net Income: Reported at $570 million, down 23.49% YoY and 38.24% QoQ, translating to an earnings per share (EPS) of $1.77, reflecting a decrease of 22.71% YoY and 37.23% QoQ.
3. Cash Flow and Balance Sheet Health:
- Free Cash Flow: Generated $302 million, showcasing the company’s ability to generate liquidity despite declining earnings.
- Cash Position: $2.62 billion in cash and cash equivalents, providing a solid buffer amidst market uncertainties. The current ratio is at 2.13, indicating robust short-term liquidity, while long-term debt stands at $12.49 billion, representing a debt-to-equity ratio of approximately 0.82.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
10.32B
-2.85%
-2.24%
Gross Profit
1.24B
-14.23%
-11.91%
Operating Income
802.00M
-20.91%
-17.32%
Net Income
570.00M
-23.49%
-38.24%
EPS
1.77
-22.71%
-37.23%
Key Financial Ratios
currentRatio
2.13
grossProfitMargin
11.6%
operatingProfitMargin
7.39%
netProfitMargin
5.57%
returnOnAssets
1.54%
returnOnEquity
4.17%
debtEquityRatio
0.82
operatingCashFlowPerShare
$2.06
freeCashFlowPerShare
$0.93
dividendPayoutRatio
76.4%
priceToBookRatio
2.27
priceEarningsRatio
13.63
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights from the Earnings Call
- Cost Management: "We are implementing stringent cost control measures to align our operational footprint with current demand levels, which we believe will drive greater efficiency in the upcoming quarters." - [Management]
- Market Conditions: "While we face near-term challenges, we've seen some early signs of stabilization in demand patterns, particularly in our North American markets, which gives us cautious optimism for the next quarter." - [Management]
### Key Themes
- Focus on Operational Efficiency: Management emphasized a commitment to enhancing operational efficiencies as input costs fluctuate.
- Market Demand Outlook: Affirms the necessity for adaptability as industry conditions continue to evolve, as noted in their performance advisory.
"In this unpredictable environment, we remain committed to driving operational excellence and optimizing our production capabilities to better serve our clients."
— CEO
"Investors should note that while short-term performance may face pressure, our strategic initiatives are designed to create long-term value and resilience."
— CFO
Forward Guidance
### Future Outlook
Management has projected a cautious but positive outlook for Q4 2024, primarily bolstered by anticipated stabilization in demand across several markets. The guidance reflects efforts to improve margins through cost-cutting initiatives and increased operational efficiencies. Specific targets include a return to revenue growth in the upcoming quarters and continual refinement of production processes. Investors are advised to monitor the impact of geopolitical developments and input cost trends closely, as these factors are likely to influence operational outcomes and profitability metrics significantly moving forward.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0EDD.L Focus
12.03%
7.39%
4.17%
13.63%
0KAK.L
36.70%
24.60%
3.25%
10.54%
0LCE.L
31.60%
12.00%
15.90%
24.47%
0LXB.L
36.30%
19.50%
5.68%
19.61%
0JYW.L
19.60%
15.20%
-24.10%
29.89%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
In light of the recent financial performance and prevailing market conditions, investors should approach LyondellBasell with a balanced perspective. While current financial metrics reflect operational pressures, the company’s strategic focus on cost efficiency and potential market stabilization offer a compelling narrative for long-term growth. Key investment considerations should include monitoring raw material price fluctuations, geopolitical developments, and effective execution of operational strategies. Therefore, maintaining a cautious but optimistic outlook appears prudent as LyondellBasell navigates through these challenges.
Key Investment Factors
Growth Potential
LyondellBasell is positioned to leverage growth from emerging markets and potential demand recovery in the industrial materials sector, particularly with advancements in product innovation and sustainability initiatives.
Profitability Risk
Risks include volatility in raw material prices, geopolitical tensions affecting supply chain dynamics, and fluctuating demand across core markets, which could further impact profitability.
Financial Position
The company's financial position is sound, reflected in a strong current ratio and significant cash reserves, providing stability and the ability to navigate through economic uncertainties.
SWOT Analysis
Strengths
Strong brand presence in the industrial materials sector
Robust financial reserves and liquidity position
Diverse product portfolio catering to various industries
Weaknesses
Declining profitability indicators in the short-term
Dependence on fluctuating raw material prices
Challenges in demand recovery from key markets
Opportunities
Potential market recovery in North America and Asia
Growing demand for sustainable materials and innovations
Strategic partnerships to enhance product offerings
Threats
Global economic slowdown affecting demand
Increased competition leading to pricing pressures
Regulatory changes impacting operations and profitability