New LyondellBasell CFO Faced With Slowdown in Demand for Plastics, Chemicals

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 [e-mail]

(END) Dow Jones Newswires

October 14, 2019 17:05 ET (21:05 GMT)

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