Analysis of Debt
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LyondellBasell Industries N.V. pages available for free this week:
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2011
- Return on Equity (ROE) since 2011
- Debt to Equity since 2011
- Price to Earnings (P/E) since 2011
- Price to Operating Profit (P/OP) since 2011
- Analysis of Revenues
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Total Debt (Carrying Amount)
LyondellBasell Industries N.V., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Current Maturities of Long-Term Debt
- The current maturities of long-term debt remained relatively stable from 2014 through 2017, fluctuating slightly between 2 and 4 million US dollars. In 2018, there was an increase to 5 million US dollars, marking the highest value in the analyzed period.
- Short-Term Debt
- Short-term debt exhibited significant volatility over the period. It started at 346 million US dollars in 2014 and showed a moderate increase to 353 million in 2015, followed by a sharp surge to 594 million in 2016. This was succeeded by a notable decline to 68 million in 2017 before escalating sharply again to 885 million in 2018, the highest figure observed in five years.
- Long-Term Debt, Excluding Current Maturities
- Long-term debt, excluding current maturities, showed a consistent upward trend from 6,757 million US dollars in 2014 to a peak of 8,549 million US dollars in 2017. In 2018, this figure experienced a slight decrease to 8,497 million US dollars, indicating a minor step back after consecutive growth.
- Total Debt Including Capital Leases (Carrying Amount)
- Total debt, including capital leases, increased steadily over the years. Starting at 7,107 million US dollars in 2014, it rose annually to reach 8,981 million in 2016. There was a small decline in 2017 to 8,619 million, followed by a rebound to the highest level of 9,387 million in 2018.
- Overall Observations
- The debt profile demonstrated overall growth in total indebtedness with some fluctuations in short-term debt levels. While long-term debt showed a general increasing pattern, short-term debt was more variable, affecting the composition of total debt year over year. The slight declines observed in both long-term and total debt during 2017 were temporary, with figures increasing again in 2018, suggesting an expansion in leverage toward the end of the period.
Total Debt (Fair Value)
| Dec 31, 2018 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Commercial paper | |
| Financial payables to equity investees | |
| Precious metal financings | |
| Other short-term debt | |
| Long-term debt excluding capital leases | |
| Other long-term debt | |
| Total debt including capital leases (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2018-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
LyondellBasell Industries N.V., interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||
| Capitalized interest | |||||||||||
| Interest costs incurred |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Interest Expense
- The interest expense shows a fluctuating trend over the five-year period. There was a decrease from 352 million US dollars at the end of 2014 to 310 million in 2015. This was followed by a slight increase to 322 million in 2016. A significant rise occurred in 2017, where interest expense peaked at 491 million, before decreasing again to 360 million in 2018. This indicates volatility in the company's borrowing costs or changes in debt levels during the period.
- Capitalized Interest
- Capitalized interest exhibited variability throughout the given years. Starting at 25 million in 2014, it declined sharply to 11 million in 2015. It then rose to 33 million in 2016, decreased again to 20 million in 2017, and increased notably to 45 million in 2018. This pattern suggests fluctuations in the amount of interest costs that were added to the cost of long-term assets, potentially reflecting changes in capital expenditure activities or project financing strategies.
- Interest Costs Incurred
- The total interest costs incurred, representing the sum of interest expense and capitalized interest, closely mirrored the movements of its components. The figure declined from 377 million in 2014 to 321 million in 2015, then increased to 355 million in 2016. A substantial increase was observed in 2017 with total interest costs reaching 511 million, before decreasing to 405 million in 2018. This overall trend aligns with the interest expense and capitalized interest patterns, indicating periods of increased borrowing or higher interest rates particularly around 2017.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
2018 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
- Interest Coverage Ratio (without capitalized interest)
-
The interest coverage ratio shows a notable fluctuation over the five-year period. It increased from 17.23 in 2014 to a peak of 21.03 in 2015, indicating an improvement in the company's ability to cover interest expenses through operating income. However, the ratio then declined steadily to 17.25 in 2016 and further dropped to 12.19 in 2017, suggesting a reduction in earnings relative to interest obligations during these years. In 2018, the ratio partially recovered to 15.75, signaling some improvement in interest coverage but remaining below earlier levels observed in 2014 and 2015.
- Adjusted Interest Coverage Ratio (with capitalized interest)
-
This adjusted ratio, which accounts for capitalized interest, follows a similar trajectory to the unadjusted ratio but consistently registers slightly lower values across all years. It rose from 16.08 in 2014 to 20.31 in 2015, mirroring the trend of improved coverage capacity early in the period. A decline is observed thereafter, dropping to 15.65 in 2016 and further down to 11.71 in 2017, indicating a weakening ability to service interest when capitalized interest is considered. By 2018, a moderate recovery to 14.00 is seen, aligning with the pattern evident in the non-adjusted ratio.
- Overall Analysis
-
Both metrics suggest that the company's interest coverage capability strengthened from 2014 to 2015, followed by a weakening phase through 2017 before partial recovery in 2018. The adjusted ratio's lower values highlight the impact of capitalized interest on the company’s debt servicing ability but do not alter the overall trend. The reductions in coverage ratios post-2015 may point to increased interest expenses, decreased earnings, or a combination of both, which could warrant closer examination of underlying operational or financing factors during this period. The partial recovery in 2018 may indicate some improvement in financial performance or cost management affecting interest expenses.