LyondellBasell Industries N.V. (NYSE:LYB)

Finished Goods

The finished goods inventory exhibits a moderate decline from 2014 to 2016, decreasing from 2,919 million US dollars to 2,575 million US dollars. However, there is a reversal of this trend in the subsequent years, with values increasing back to 3,066 million US dollars by the end of 2018. This indicates a recovery and gradual growth in finished goods inventory after 2016.

Work-in-Process

Work-in-process inventory shows a consistent downward trend throughout the period, dropping significantly from 304 million US dollars in 2014 to 138 million US dollars in 2018. This steady reduction suggests improved efficiency in production processes or a strategic decision to reduce intermediate inventory levels over time.

Raw Materials and Supplies

The raw materials and supplies inventory experiences a declining trend from 2014 to 2016, decreasing from 1,294 million US dollars to 1,080 million US dollars. A slight recovery occurs afterward, as values increase to 1,311 million US dollars by the end of 2018. This pattern may reflect fluctuations in procurement strategies or changes in supply chain dynamics.

Total Inventories

Total inventories declined steadily from 2014 (4,517 million US dollars) to 2016 (3,809 million US dollars), indicating a concerted effort to reduce overall inventory levels. However, from 2017 onward, total inventories rose again, reaching 4,515 million US dollars by the end of 2018. This uptick might correspond with increased production or stockpiling in anticipation of market demand.

Inventories

Reported inventories demonstrated a downward trend from 4517 million USD in 2014 to a low of 3809 million USD in 2016, followed by a recovery to 4515 million USD in 2018, nearly returning to the initial level. Adjusted inventories, which include LIFO reserve adjustments, showed a generally increasing pattern from 4787 million USD in 2014 to 5313 million USD in 2018, with a notable rise from 4308 million USD in 2016 to 5411 million USD in 2017.

Current Assets

Reported current assets decreased significantly from 11645 million USD in 2014 to 9599 million USD in 2016, then increased to 11738 million USD in 2017 before declining again to 10566 million USD in 2018. Adjusted current assets followed a similar trajectory but remained consistently higher than reported figures due to inventory adjustments; they decreased from 11915 million USD in 2014 to 10098 million USD in 2016, then rose sharply to 12932 million USD in 2017, followed by a decrease to 11364 million USD in 2018.

Total Assets

Reported total assets experienced a decline from 24283 million USD in 2014 to 22757 million USD in 2015, followed by a slight increase and continued growth to 28278 million USD in 2018. Adjusted total assets showed a smoother upward trend, increasing from 24553 million USD in 2014 to 29076 million USD in 2018. The difference between reported and adjusted total assets widened over time, reflecting the increasing impact of LIFO adjustments on asset valuation.

Shareholders’ Equity

Reported total company shareholders’ equity decreased from 8314 million USD in 2014 to 6048 million USD in 2016, then recovered substantially to 10257 million USD in 2018. Adjusted equity followed a similar pattern but remained consistently higher, starting at 8584 million USD in 2014, dipping to 6547 million USD in 2016, and rising sharply to 11055 million USD by 2018. The adjustments indicate a meaningful impact on equity valuation through the inclusion of LIFO reserve effects.

Net Income Attributable to Company Shareholders

Reported net income showed fluctuations, with a rise from 4174 million USD in 2014 to 4476 million USD in 2015, a decline to 3836 million USD in 2016, then a peak at 4879 million USD in 2017, followed by a slight decrease to 4688 million USD in 2018. Adjusted net income presented a different pattern, generally higher than reported figures except in 2014, increasing steadily from 3756 million USD in 2014 to a peak of 5574 million USD in 2017, before declining to 4292 million USD in 2018. This suggests LIFO reserve adjustments had a significant effect on income figures, particularly in 2017.

The analysis of key financial ratios over the five-year period from 2014 to 2018 reveals several noteworthy trends and insights.

Liquidity Ratios

The reported current ratio exhibited moderate fluctuations, starting at 2.14 in 2014, peaking at 2.46 in 2017, then declining to 1.92 by 2018. The adjusted current ratio, which accounts for inventory LIFO reserve adjustments, generally exceeded the reported figures for each year, following a similar pattern but maintaining slightly higher values. This suggests a consistently strong short-term liquidity position, with a slight weakening toward the end of the period.

Profitability Margins

The reported net profit margin increased from 9.15% in 2014 to a high of 14.15% in 2017 before decreasing to 12.02% in 2018. The adjusted net profit margin followed a similar trajectory but maintained a wider gap, starting lower at 8.24% in 2014, reaching 16.16% in 2017, and then dropping to 11% in 2018. This indicates that the inventory adjustments have a varying impact on reported profitability, and the peak profitability was realized in 2017 with a notable decline the following year.

Efficiency Ratios

The reported total asset turnover ratio declined steadily from 1.88 in 2014 to 1.24 in 2016, with minor recovery to 1.38 by 2018. The adjusted total asset turnover ratio tracked closely, showing a similar downward and partial recovery trend. This pattern suggests decreased efficiency in utilizing assets to generate sales, particularly pronounced in the middle years, with some improvement evident by 2018.

Leverage Ratios

The reported financial leverage ratio increased notably from 2.92 in 2014 to a peak of 3.88 in 2016, then decreased to 2.76 in 2018. The adjusted leverage ratio mirrors this trend but with slightly lower levels overall. These movements reflect a phase of heightened reliance on debt or equity financing in the middle of the period, followed by a deleveraging trend toward the end.

Return on Equity (ROE)

Reported ROE values were quite volatile, starting at 50.2% in 2014, reaching an all-time high of 68.34% in 2015, declining thereafter to 45.71% by 2018. Adjusted ROE showed a similar pattern but was generally lower, peaking at 65.1% in 2016, then dropping to 38.82% in 2018. Both reported and adjusted figures indicate substantial returns on equity in the earlier years, followed by a gradual decline in shareholder returns over the latter part of the period.

Return on Assets (ROA)

The reported ROA rose from 17.19% in 2014 to 19.67% in 2015, then decreased to 16.58% in 2018 after some oscillation. Adjusted ROA values followed a similar trajectory with a peak at 20.34% in 2017, then a decline to 14.76% in 2018. These trends reflect variations in overall asset profitability, with the most efficient use of assets occurring between 2015 and 2017, followed by a performance drop in the final year observed.

In summary, the financial ratios demonstrate that the company experienced its strongest profitability and leverage performance generally around 2015 to 2017, with a tendency toward reduced asset efficiency and profitability in 2018. The LIFO reserve adjustments tend to moderate some of the reported values, particularly in profit margins and returns, highlighting the importance of considering inventory accounting effects when assessing financial health.

Current Assets (Reported)

The reported current assets exhibit a fluctuating trend over the five-year period. Beginning at $11,645 million in 2014, there is a decline to $9,789 million in 2015 and a slight further decrease to $9,599 million in 2016. This is followed by a recovery to $11,738 million in 2017 before decreasing again to $10,566 million in 2018. Overall, the reported current assets show some volatility but end lower in 2018 compared to 2014.

Current Assets (Adjusted for LIFO Reserve)

Adjusted current assets, which account for the LIFO reserve, also show fluctuation but with generally higher values compared to the reported amounts. Starting at $11,915 million in 2014, the level decreases to $9,862 million in 2015 but then increases to $10,098 million in 2016. It further rises to a peak of $12,932 million in 2017 before declining to $11,364 million in 2018. The adjustment for LIFO reserve consistently results in asset values exceeding reported amounts, indicating the reserve’s impact in increasing the current asset base.

Current Ratio (Reported)

The reported current ratio displays an overall upward trend until 2017, rising from 2.14 in 2014 to a peak of 2.46 in 2017, indicating improved short-term liquidity. However, in 2018, it declines notably to 1.92, suggesting a deterioration in the company’s ability to cover current liabilities with current assets. The ratio remains above 1.9 throughout the period, reflecting a generally sound liquidity position despite the decline in the final year.

Current Ratio (Adjusted for LIFO Reserve)

The adjusted current ratio follows a similar pattern to the reported ratio but consistently shows higher values, reflecting the positive effect of LIFO reserve adjustments on liquidity measurements. It increases from 2.19 in 2014 to 2.71 in 2017, reaching the highest liquidity level within the period. Like the reported ratio, there is a decrease to 2.06 in 2018. The adjusted ratio remaining above 2.0 even in 2018 suggests continued relative financial strength when considering LIFO adjustments.

The financial data spanning from 2014 to 2018 indicates several notable trends in profitability and net income metrics when comparing reported figures to inventory LIFO reserve adjusted figures. The analysis reveals variations both in absolute income values and profit margins over the five-year period.

Reported Net Income Attributable to the Company Shareholders

The reported net income showed an overall upward trajectory from 2014 to 2017, increasing from 4,174 million USD to 4,879 million USD, representing a steady growth over the first four years. However, there was a decline in 2018 when reported net income decreased to 4,688 million USD, reversing part of the prior gains.

Adjusted Net Income Attributable to the Company Shareholders

The adjusted net income, which includes inventory LIFO reserve adjustments, also demonstrated an increasing pattern from 2014 through 2017, rising from 3,756 million USD to a peak of 5,574 million USD in 2017. However, a significant decrease is observed in 2018 with values dropping to 4,292 million USD, indicating a sharp contraction compared to the previous year and accentuating volatility in adjusted earnings.

Reported Net Profit Margin

The reported net profit margin increased from 9.15% in 2014 to a peak at 14.15% in 2017. This improvement suggests enhanced profitability in relation to revenue during this period. Nevertheless, the margin declined to 12.02% in 2018, denoting a reduction in operational efficiency or pressure on earnings despite maintaining relatively strong margin levels historically.

Adjusted Net Profit Margin

The adjusted net profit margin shows a consistent rise between 2014 and 2017, beginning at 8.24% and reaching 16.16%, which is notably higher than the reported margin for 2017. This indicates that the inventory LIFO reserve adjustment had a significant positive impact on profitability ratios during this period. Similar to the reported figures, there is a marked decline in 2018 to 11.00%, which points to a considerable decrease in profitability on an adjusted basis, aligning with the reduced net income observed.

In summary, the period from 2014 to 2017 was characterized by progressive growth in both reported and adjusted net income alongside improving profitability margins. The peak in 2017 reflects operational strength and favorable conditions. However, the year 2018 marked a downturn in multiple performance indicators, with decreases in both net income (reported and adjusted) and net profit margins. The adjusted metrics consistently registered higher profitability margins compared to reported figures, underscoring the significance of inventory adjustments on the company's financial results. The decline in 2018 suggests challenges that may have adversely affected earnings quality and margin sustainability during that year.

The financial data over the five-year period reveals distinct trends in both reported and adjusted total assets, as well as total asset turnover ratios.

Total Assets

Reported total assets demonstrate an overall increasing trend, beginning at 24,283 million US dollars at the end of 2014 and rising to 28,278 million US dollars by the end of 2018. Although there was a slight dip observed in 2015 to 22,757 million US dollars, assets steadily increased in subsequent years, reaching the highest value in 2018.

Adjusted total assets, which account for the LIFO reserve adjustment, follow a similar upward trajectory. Starting at 24,553 million US dollars in 2014, adjusted assets exhibit a minor decline in 2015 to 22,830 million but increase consistently afterward, culminating at 29,076 million US dollars in 2018. This adjustment slightly elevates asset values relative to the reported figures across all periods.

Total Asset Turnover Ratios

The reported total asset turnover ratio depicts a decreasing trend from 1.88 in 2014 to 1.24 in 2016, indicating a reduction in sales generated per unit of asset during these years. Thereafter, there is a modest recovery to 1.38 by 2018, although the turnover remains below the initial 2014 level.

The adjusted total asset turnover ratio parallels the reported figures, decreasing from 1.86 in 2014 to 1.22 in 2016. The ratio then improves slightly to 1.34 by 2018, suggesting a marginally enhanced efficiency when adjusted for inventory accounting methods, yet still reflecting reduced asset utilization compared to the earlier periods.

Overall, the data indicates a consistent growth in asset base over the five-year span, with the LIFO reserve adjustment increasing asset values moderately. Concurrently, the asset turnover ratios exhibit a decline in operational efficiency up to 2016, followed by a gradual recovery by 2018. The adjusted turnover ratios remain slightly below reported values throughout, suggesting that the inventory accounting adjustment moderately affects measured efficiency but does not change the overall trend.

The analysis of the data reveals several notable trends in the financial position and leverage ratios over the five-year period.

Total Assets

Reported total assets demonstrate a general upward trend, increasing from 24,283 million USD in 2014 to 28,278 million USD in 2018. Despite a slight dip in 2015, the overall trajectory is positive. The LIFO reserve adjusted total assets follow a similar pattern, starting higher than the reported total assets and consistently remaining above the reported values each year. Adjusted total assets increased from 24,553 million USD in 2014 to 29,076 million USD in 2018, indicating that the LIFO adjustment adds significant value to the asset base.

Stockholders’ Equity

The reported total company share of stockholders’ equity shows a decline from 8,314 million USD in 2014 to 6,048 million USD in 2016, followed by a strong recovery peaking at 10,257 million USD in 2018. The adjusted stockholders’ equity, which incorporates LIFO reserve adjustments, mirrors this trend but reflects consistently higher equity balances each year. The adjusted equity rose from 8,584 million USD in 2014 to 11,055 million USD in 2018, illustrating improved net asset value when inventory valuation effects are considered.

Financial Leverage

Reported financial leverage increased from 2.92 times in 2014 to a peak of 3.88 times in 2016, indicating higher reliance on debt relative to equity during this period. This ratio then declined to 2.76 times by 2018, suggesting a reduction in financial risk and improved capitalization. Similarly, the adjusted financial leverage follows the same overall pattern but remains slightly lower than the reported figures, decreasing from 2.86 times in 2014 to 2.63 times in 2018. This difference reflects the higher adjusted equity base due to LIFO reserve considerations, resulting in a healthier leverage profile.

In summary, the company’s asset base and equity show growth with positive trends in adjusted figures that account for inventory valuation adjustments. Financial leverage peaked mid-period but improved towards the end of the five years, indicating a strengthening balance sheet and reduced leverage risk when considering LIFO adjustments.

The financial results over the five-year period indicate variations in profitability, equity, and return on equity (ROE) when considering both reported and LIFO reserve adjusted data. A detailed analysis follows.

Net Income Attributable to Company Shareholders

Reported net income exhibits a fluctuating trend, starting at $4,174 million in 2014, increasing to a peak of $4,879 million in 2017, before slightly declining to $4,688 million in 2018. Adjusted net income, which accounts for inventory LIFO reserve effects, similarly trends upward with a notable increase peaking at $5,574 million in 2017, followed by a decrease to $4,292 million in 2018. The adjusted figures generally show higher income values compared to reported amounts, indicating positive adjustments from LIFO reserve considerations during most periods.

Total Company Share of Stockholders’ Equity

The reported equity starts at $8,314 million in 2014, declines in 2015 and 2016 to $6,550 million and $6,048 million respectively, before recovering strongly to $8,949 million in 2017 and further to $10,257 million in 2018. Adjusted equity follows a similar trajectory but with slightly higher values, beginning at $8,584 million in 2014, decreasing modestly to $6,623 million in 2015 and $6,547 million in 2016, then increasing to $10,143 million in 2017 and $11,055 million in 2018. The adjustments consistently increase equity figures, reflecting the impact of inventory valuation changes.

Return on Equity (ROE)

Reported ROE is notably high at 50.2% in 2014, increasing to a peak of 68.34% in 2015, then gradually declining to 45.71% in 2018. Adjusted ROE generally tracks a similar pattern but with some variation, starting at 43.76% in 2014 and peaking at 65.1% in 2016. It steadily declines afterwards, reaching 38.82% in 2018. The downward trend in ROE from 2015 through 2018 suggests a reduction in profitability relative to equity, even after adjustments.

In summary, net income and equity experienced fluctuations over the five years, with notable adjustments from LIFO reserve impacts enhancing reported figures. However, despite these adjustments, ROE shows a declining trend in recent years, indicating the company faced challenges in maintaining profitability relative to its equity base. The 2017 year marks a pivotal point with peak adjusted net income and substantial equity increase, followed by a decline in income and return metrics in 2018.

The financial data reveals notable trends and variations in income, assets, and return metrics over the five-year period from 2014 to 2018. The reported net income attributable to the Company’s shareholders experienced moderate fluctuations, starting at 4,174 million US dollars in 2014, rising to a peak of 4,879 million in 2017, and slightly declining to 4,688 million by the end of 2018. Adjusted net income, which accounts for LIFO reserve adjustments, exhibits a somewhat different pattern with a steady increase from 3,756 million in 2014 to 5,574 million in 2017, followed by a decrease to 4,292 million in 2018. This suggests that the adjustments made for inventory accounting impact the portrayal of income, particularly highlighting stronger earnings in 2017 when adjusted figures are considered.

Total assets, both reported and adjusted, show an overall uptrend during the timeframe. Reported total assets declined marginally from 24,283 million in 2014 to 22,757 million in 2015, then increased consistently to reach 28,278 million by 2018. Adjusted total assets demonstrate a similar trajectory with slightly higher values reflecting inventory valuation adjustments, rising from 24,553 million in 2014 to 29,076 million in 2018. This trend indicates a general expansion of the asset base, with adjustments resulting in a modest, consistent upward shift across all years.

Return on assets (ROA), a key efficiency metric, displays some volatility. Reported ROA started at 17.19% in 2014, peaked at 19.67% in 2015, dipped to 16.36% in 2016, before recovering to 18.62% in 2017 and declining again to 16.58% in 2018. Adjusted ROA follows a similar, though slightly more volatile trend, beginning at 15.3% in 2014, increasing to 18.74% in 2015, and peaking at 20.34% in 2017—higher than the reported peak—before falling to 14.76% in 2018. The adjusted return figures highlight more pronounced peaks and troughs, underscoring how inventory valuation methods influence efficiency metrics. The decline in 2018 for both measures might reflect challenges in maintaining asset profitability despite asset growth.

Overall, the adjusted figures incorporating LIFO reserve adjustments tend to show higher net income and asset values, along with sharper movements in return ratios, indicating that conventional reporting may understate certain performance aspects. The data reflects a company experiencing growth in asset base and earnings capacity through 2017, followed by a moderate decline in profitability metrics in 2018 despite increased asset levels.

Net Income Trends

Reported net income shows moderate growth with fluctuations; adjusted net income suggests stronger earnings peaks, especially in 2017.

Asset Base

Both reported and adjusted total assets trend upward overall, with adjusted assets consistently higher, indicating inventory valuation effects.

Return on Assets

ROA metrics exhibit volatility. Adjusted ROA peaks higher and declines more sharply than reported ROA, reflecting the influence of inventory accounting adjustments on perceived efficiency.

Performance Insights

The adjustments for LIFO reserves highlight stronger historical performance in 2017 and demonstrate the material impact of accounting treatment on income and efficiency measures. The decline in 2018 across returns despite asset growth suggests emerging pressures on profitability.