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LyondellBasell Drops as Earnings Miss Estimates

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Feb. 1 (Bloomberg) -- LyondellBasell Industries NV, the world’s largest maker of polypropylene, fell the most in 11 weeks after fourth-quarter earnings trailed analysts’ estimates as the loss at the European plastics unit widened.

LyondellBasell fell 3.2 percent to $61.37 at the close in New York, the most since Nov. 15. Shares of the company, based in Rotterdam and run from Houston, have gained 7.5 percent this year.

Net income was $1.09 a share, compared with a net loss of 38 cents a year earlier, LyondellBasell said today in a statement. Profit excluding discontinued operations was $1.13 a share, trailing the $1.14 average of 19 estimates compiled by Bloomberg.

The operating loss from olefins and polyolefins in Europe and Asia widened to $94 million, from $73 million a year earlier, while other segments gained.

Results in the European olefins business were “well below our estimates,” Laurence Alexander, a New York-based analyst at Jefferies & Co. who rates the shares buy, said in a note today.

Chairman and Chief Executive Officer James Gallogly is adding capacity in the U.S. as shale-gas extraction boosts supplies of natural gas liquids used to make plastics such as polypropylene and polyethylene.

“Outside of North America, the global olefins industry continues to experience low operating rates and profitability, negatively impacting our European olefins and commodity polyolefin businesses,” Gallogly said in the statement.

Investors probably expected better results after U.S. prices for ethane, a natural gas liquid used to make ethylene and related plastics, fell “precipitously” in the fourth quarter, Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, said today in a note.

Ethane at Mont Belvieu, Texas, tumbled 66 percent in the fourth quarter from a year earlier and hit a multiyear low of 21.5 cents a gallon on Jan. 9.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net