New LyondellBasell CFO Faced With Slowdown in Demand for Plastics, Chemicals
October 14 2019 - 5:20PM
Dow Jones News
By Nina Trentmann
Plastics and chemicals manufacturer LyondellBasell Industries NV
has hired a new finance chief to find ways to grow even as trade
tensions between the U.S. and China and a slowing world economy are
damping demand for the company's products.
LyondellBasell on Monday named Michael McMurray chief financial
officer, effective Nov 5. Mr. McMurray joins from insulation and
roofing company Owens Corning, where he is CFO. Mr. McMurray, who
joined Owens Corning in 2008, is scheduled to leave on Oct. 23, the
insulation company said.
Before Owens Corning, Mr. McMurray worked at Royal Dutch Shell
PLC for 21 years, including stints as vice president at Shell
Capital, global treasurer for Shell Chemicals and Americas finance
manager for the company's lubricants business.
Mr. McMurray takes over from departing LyondellBasell CFO Thomas
Aebischer, who plans to retire at the end of the year.
Mr. McMurray will inherit a well-run finance function, analysts
said. LyondellBasell was formed in 2007, when Dutch chemical firm
Basell International Holdings BV paid $12.7 billion to buy
Houston-based Lyondell Chemical Co.
The transaction added more than $20 billion in debt to the
company's balance sheet just before commodity markets tumbled.
LyondellBasell filed for bankruptcy a little more than a year after
the merger.
It emerged from bankruptcy leaner and more cost-focused, an
advantage compared with some rivals, said Jonas Oxgaard, an analyst
at investment management firm Sanford C. Bernstein & Co.
LyondellBasell's ratio between its net debt and earnings before
interest, taxes, depreciation and amortization was 1.9 times at the
end of June, according to S&P Global IQ, putting it within the
company's target range of 1.5 to 2.5 times. A net debt to Ebitda
ratio of less than 2 times is a sign of a strong balance sheet in
the industry, said David Begleiter, a managing director at Deutsche
Bank Securities Inc.
LyondellBasell, which didn't immediately respond to a request
for comment, faces the challenges of trade tensions and slowing
global growth while production capacity, particularly in the U.S.,
is growing.
LyondellBasell is building two facilities in Texas, while other
competitors also are expanding production sites, said Daniel
Krauss, an S&P Global Ratings analyst. "There is a lot of
capacity coming onto the market, which will make the operating
environment challenging through 2020," Mr. Krauss said.
LyondellBasell sales declined to $17.82 billion in the six
months ending June 30, down from $19.97 billion in the same
prior-year period. Net income fell to $1.82 billion in the first
six months of 2018, compared with $2.88 billion in the first six
months of the previous year.
LyondellBasell at its most recent investor day in September set
out a reduced range for growth-focused capital expenditures of $700
million to $1.2 billion annually from 2020 to 2022. The company
currently doesn't plan new projects between 2021 and 2024,
according to a Sept. 24 investor presentation.
Analysts see the company pursuing more growth through bolt-on
acquisitions following the breakdown of talks with Braskem SA
controlling shareholder Odebrecht SA about a takeover of the
Brazilian petrochemical producer earlier this year.
"They'd look to supplement organic with inorganic growth, while
sticking to their leverage target," S&P's Mr. Krauss said.
The company last year completed a $2.25 billion deal to acquire
Fairlawn, Ohio-based A. Schulman, a plastic compounds supply
company.
Write to Nina Trentmann at nina.trentmann@wsj.com
(END) Dow Jones Newswires
October 14, 2019 17:05 ET (21:05 GMT)
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