LyondellBasell results miss Street; shares slump

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(Global Markets) - Chemical maker LyondellBasell Industries NV's (LYB.N) quarterly operating profit fell far short of Wall Street's expectations as refining margins dropped and customers conserved cash.

Many European customers chose to draw down stockpiles rather than make new purchases amid the sovereign debt crisis. Many of the same issues affected rival Dow Chemical (DOW.N) during the fourth quarter.

"We expect overall first-quarter economic activity to remain slow in Europe and Asia for certain of our businesses," LyondellBasell Chief Executive Jim Gallogly said in a statement.

Operating profit dropped in all four of the company's operating segments, and was most pronounced in its refining and oxyfuels unit, which makes gasoline. The benchmark crude oil margin the company used slipped 41 percent.

The company's European chemical plants, also known as crackers, use pricey crude oil-derived naphtha to produce chemicals, a process that is much more expensive than in the United States where cheap natural gas can be used to make the same products.

In Europe the company sold 5 percent less polyethylene and 10 percent polypropylene, both essential chemicals for plastics production.

The price of ethylene did rise 15 percent in North and South America, though sales of polyethylene in the region were flat and polypropylene sales edged up only slightly.

LyondellBasell reported a net loss of $218 million, or 38 cents per share, for the fourth quarter, compared with net profit of $766 million, or $1.34 per share, in the year-ago period.

Excluding one-time items, such as early debt repayment and the mothballing of a French refinery, LyondellBasell earned 41 cents per share. By that measure, analysts on average expected 76 cents per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 8 percent to $11.44 billion. Analysts expected $12.04 billion.

During the quarter LyondellBasell, which is technically headquartered in the Netherlands but run out of Houston, doubled its dividend and said it would pay a separate special dividend.

The company, which emerged from bankruptcy protection in 2010, also said it would buy back nearly $2.8 billion of debt, substantially improving its balance sheet. LyondellBasell recorded a $431 million charge in the fourth quarter for the move.

Last fall LyondelBasell shut its Berre, France, refinery, which employs 370 workers. The decision sparked a strike at the plant. The company ultimately decided to put the refinery in cocoon mode, meaning it will be stopped, cleaned, and given another twos years for a potential acquirer to buy it.

Shares of LyondellBasell were down 36 cents at $44.22 on the New York Stock Exchange.

Elsewhere on Friday, Apollo Global Management LLC (APO.N), which owns a stake in LyondellBasell, reported a drop in fourth-quarter earnings due to changes in the accounting value of some assets.

(Reporting by Ernest Scheyder in New York and Swetha Gopinath in Bangalore; Editing by Don Sebastian, John Wallace and Derek Caney)