Global oil and petchem revenues hit by challenging market environment
As the pandemic continues to present challenges unlike any we have seen before, most companies now believe that financial results are likely to remain depressed into the third quarter.
Two major US companies swung to losses as lower prices, margins, and sales volumes significantly impact both companies’ second quarter results. ExxonMobil Corporation announced an estimated second quarter loss of $1.1 billion while Chevron Corporation reported a loss of $8.3 billion for the same period.
Another US-based multinational energy company that swung to losses this quarter was Phillips 66. The company announced a loss of $141 million for the second-quarter of 2020, compared with a loss of $2.5 billion in the first quarter of 2020. The company cited the disruption in refined product demand from COVID-19 and weak margins across their businesses as key reasons behind their quarterly performance.
LyondellBasell Industries, headquartered in the Netherlands, announced net income for the second quarter of $314 million, down significantly from around $1 billion reported in the same period in 2019. The company’s second quarter EBITDA was $760 million as compared to $1.57 billion reported in the second quarter of last year.
Although the company reported that their Olefins and Polyolefins (O&P) businesses benefited from strong demand for polymers used in consumer-driven packaging and healthcare applications, the Americas segment EBITDA decreased $425 million versus the second quarter 2019. The company’s O&P business in Europe, Asia, and other international markets saw EBITDA decrease by $112 million from the second quarter 2019.
Meanwhile, Total S.A and Royal Dutch Shell, narrowly avoided losses during the second quarter. Both companies’ quarterly net incomes were hit significantly as they faced exceptional circumstances created by the COVID-19 crisis.
Shell reported a drop of 82% in adjusted earnings at $638 million for the second quarter of 2020, while France’s Total’s adjusted profit fell by 96% to $126 million. Regarding their chemicals business, Shell said that most end market segments were negatively impacted but cleaning and disinfectant products demand increased. Total’s refining and chemicals net profit decreased by 20% from last year, largely as a result of severely degraded refining margins and low plant utilization.
However, the UK-based BP could not avoid a loss during the quarter and reported a record $6.7 billion quarterly loss, compared with a profit of $2.8 billion for the same period a year earlier. The impact of lower oil prices and very weak refining margins, as well as reduced production and much lower fuel demand were cited as the main reasons behind the record loss.
Polish PKN Orlen’s revenues also decreased by 42% year-on-year to PLN17 billion mainly due to lower quotations of refining and petrochemical products resulting from crude oil price decrease and lower sales volumes. In addition to this, the company’s petrochemicals EBITDA decreased by PLN457 million year-on-year due to negative effect of sales volumes drop and macro deterioration.
PJSC SIBUR Holding, the largest integrated petrochemicals company in Russia, reported that their revenue decreased by 11.6% year-on-year to RUB235.3 billion ($3.46 billion) on the back of negative price dynamics in most product groups. However, the Russian company added that this was partially offset by a 58.2% increase in the Olefins & Polyolefins. Accordingly, the company’s Olefins & Polyolefins revenue increased to RUB77.7 billion ($1.06 billion), with higher production volumes by ZapSibNeftekhim.
INDIA & EAST ASIA
Indian Reliance’s petrochemicals segment was also negatively affected by lower demand and global oversupply. The company’s revenue from petrochemicals business fell 33% to INR252 billion ($3.4 billion).
Japanese Asahi Kasei’s operating income decreased 27.2% to JPY30 billion ($284 million) due to reduced shipment volumes and lower market prices for petrochemical feedstocks amid the pandemic.
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