LyondellBasell (LYB, Financial) is forecasting a favorable second quarter, driven by seasonal demand improvements across various sectors. The company is seeing moderated costs for U.S. natural gas and ethane feedstock, while European and Asian operations are benefiting from reduced crude oil expenses.
In particular, LYB expects its oxyfuels margins to strengthen, supported by higher gasoline crack spreads during the summer driving season. The European market is also undergoing rapid capacity rationalization, which is anticipated to enhance the balance between supply and demand over the coming years. Additionally, there is a growing sense of cautious optimism due to more favorable European economic and regulatory policies.
Despite prevailing economic uncertainties, global demand for packaging is predicted to remain robust, catering to the essential needs of consumers in areas such as packaged food and healthcare. To align production with these demand forecasts and planned maintenance activities, LYB projects second quarter operating rates to be 85% for North American olefins and polyolefins assets, 75% for European O&P assets, and 85% for Intermediates & Derivatives assets.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 21 analysts, the average target price for LyondellBasell Industries NV (LYB, Financial) is $74.20 with a high estimate of $105.00 and a low estimate of $51.00. The average target implies an upside of 25.22% from the current price of $59.25. More detailed estimate data can be found on the LyondellBasell Industries NV (LYB) Forecast page.
Based on the consensus recommendation from 24 brokerage firms, LyondellBasell Industries NV's (LYB, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for LyondellBasell Industries NV (LYB, Financial) in one year is $67.06, suggesting a upside of 13.18% from the current price of $59.25. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the LyondellBasell Industries NV (LYB) Summary page.
LYB Key Business Developments
Release Date: January 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LyondellBasell Industries NV (LYB, Financial) achieved a total recordable injury rate of 0.13 in 2024, marking the second lowest in the company's history.
- The company generated $3.8 billion in cash from operations with a 90% cash conversion ratio, demonstrating strong cash flow management.
- LYB returned $1.9 billion to shareholders through dividends and share repurchases, highlighting its commitment to shareholder returns.
- The Value Enhancement Program exceeded expectations, contributing approximately $600 million to 2024 EBITDA.
- The Circular and Low Carbon Solutions (LCS) business grew volumes by 65% in 2024, targeting $1 billion of incremental EBITDA by 2030.
Negative Points
- 2024 was a challenging year for the petrochemical industry, with fourth-quarter industry margins at about 60% of historical averages.
- The Olefins and Polyolefins Europe, Asia, and International segment reported an EBITDA loss of $146 million due to weak demand and lower operating rates.
- The refining segment incurred an EBITDA loss of $24 million in the fourth quarter, impacted by falling gasoline and diesel spreads.
- The Advanced Polymer Solutions segment faced significantly lower demand from automotive customers, resulting in only $15 million in EBITDA for the fourth quarter.
- The company anticipates higher ethane and natural gas costs in the first quarter of 2025, which could impact margins.
