LyondellBasell Industries N.V. (NYSE:LYB) Q3 2020 Earnings Conference Call - Final Transcript

Oct 30, 2020 • 11:00 am ET

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LyondellBasell Industries N.V. (NYSE:LYB) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

So I'd like to now open for questions. [Operator Instructions] First question in the queue is from John McNulty with BMO Capital Markets. Your line is now open.

Analyst
John McNulty

Yes. Thanks for taking my question. So it looks like there is -- normally you have a seasonal dip as you go from, kind of, 3Q levels to 4Q for a whole host of reasons. But it seems like given this year is a little bit of an atypical year we'll call it, where you've got polyethylene prices surging throughout the third quarter and into the fourth, and you've got maybe not quite as big of a delta around transportation fuels and that type of thing. I guess, how should we be thinking about your ability to maybe buck the trend of the normal seasonal dip going into 4Q, is that something that's possible as the economies are recovering? Or is that maybe too much of a stretch?

Executive
Bhavesh V. Patel

Yes. Good morning, John. Indeed, especially in polyethylene, as you noted this year -- and polypropylene to an extent, this year would -- because of the hurricanes and prior to that, the inventory reduction that we undertook as a company and generally, as an industry likely if there is some slowdown in demand, we certainly -- we as a company will take the opportunity to rebuild some inventory, we're very, very low levels today, and really kind of hand to mouth on many products, and I suspect that, that will get us through the seasonally soft period and get into next year. So I suspect that'll be the case in polyolefins for the most part.

Operator
Operator

Next question is from Steve Byrne, Bank of America. Your line is now open.

Analyst
Steve Byrne

Well, I'm just curious about this Bora JV, is that $150 million EBITDA projection, is that effectively a net income number? How would you compare that to your other assets in terms of the margin? And then the reason I ask is naphtha pricing has been pretty volatile over there and I don't know whether that's fair to be looking at for that joint venture, is it more likely that you're really getting the naphtha linked to oil prices from your refinery JV partner?

Executive
Bhavesh V. Patel

Yes. So Steve, the $150 million will be at EBITDA level, so it's like equity earnings, think of it that way. We do not expect dividends from Bora for a couple of years, because the priority will be to delever. You'll recall that the financing was roughly one-third equity, two-third debt for Bora. So the way we've outlined the joint venture and how the bank covenants work, we need to prioritize de-levering first. We'll get some incremental commission income from the sales of polyolefins, unlikely dividend income will come in year three, four and onwards.

Operator
Operator

Next question is from Jeff Zekauskas with JPMorgan. Your line is now open.

Analyst
Jeff Zekauskas

Thanks very much. Brent prices have moved down from about, I don't know, $44 a barrel to $37 over the past month. Do you