LyondellBasell Industries (NYSE: LYB) reported Q1 EPS of $1.47, $0.09 worse than the analyst estimate of $1.56. Revenue for the quarter came in at $7.5 billion versus the consensus estimate of $7.6 billion.

First Quarter 2020 Highlights

• Net Income: $0.1 billion, $0.5 billion excluding LCM1
• Diluted earnings per share: $0.42 per share, $1.47 per share excluding LCM
• EBITDA: $0.6 billion, $1.1 billion excluding LCM, resilient performance in a challenging market
• Launched production at our 500,000 ton U.S. Gulf Coast high-density polyethylene plant using LyondellBasell's next-generation Hyperzone technology
• Expanding our presence in China with definitive agreements for an integrated olefins and polyolefins joint venture with Bora using LyondellBasell's polyolefin technologies
• Safely operating major facilities as an essential industry supporting society's needs

"Despite the dual challenges of low oil prices and impacts from the coronavirus pandemic, LyondellBasell delivered resilient results and moved forward on our strategic initiatives during the first quarter. Our two Olefins & Polyolefins segments experienced strong consumer-driven demand for polymers used in packaging and medical products which contributed to higher underlying profitability for the combined segments relative to the prior quarter. We advanced on initiatives to increase our long-term profitability, including successfully beginning production at our 500,000 ton high-density polyethylene plant using our next-generation Hyperzone technology and signing definitive agreements with Bora to build an integrated olefins and polyolefins joint venture," said Bob Patel, LyondellBasell CEO.

"During March, global initiatives to limit the spread of COVID-19 resulted in falling demand for transportation fuels that sharply reduced margins for our oxyfuels and gasoline produced in the Intermediates & Derivatives and Refining segments. Automotive manufacturing shutdowns diminished typical seasonal improvements for our Advanced Polymer Solutions segment where more than one third of the segment's product volumes are utilized in the automotive sector. In response, we have temporarily halted production at several relatively small plants in our APS segment serving automotive end markets. While our major facilities are all operating, we have appropriately reduced rates across our system to match decreased customer demand.

"We are navigating through these challenging times by finding benefits from our core strengths in operational excellence, cost management and capital discipline. Our significant global feedstock flexibility serves us well during periods of volatile raw material prices. We have taken early, proactive measures to further strengthen our position by maximizing cash generation and reducing expenditures while increasing liquidity to ensure we remain well-positioned through these events," Patel said.

OUTLOOK

"The effects from the coronavirus pandemic, low crude oil pricing and a slowing economy will increasingly impact our businesses during the second quarter. In April and May, our order books indicate strong ongoing demand for our polyolefins used in consumer packaging and medical applications. Weak demand from markets for industrial and durable products is expected to persist. Our Refining and Oxyfuels & Related Products businesses will be impacted by significantly lower demand for transportation fuels.

"We are taking actions to manage risk by accelerating cost savings initiatives, aggressively managing working capital, reducing 2020 capital expenditures by $500 million and increasing liquidity to over $5 billion during April. Our dividend and our investment grade balance sheet both play integral roles in our shareholder value proposition and we are committed to maintaining a disciplined approach to capital allocation with a focus on funding our dividend. In the event of a prolonged or deeper downturn, we will act pragmatically and evaluate all prudent options. While it is too early to predict the magnitude and duration of the downturn, we entered this crisis from a position of strength and we believe we are well-positioned to navigate this volatile environment and prepare the company for an eventual recovery of the economy," Patel said.

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