LyondellBasell Industries N.V. (LYB) has finalized the purchase of mechanical recycling assets and properties from PreZero, a prominent global leader in recycling and waste management services. The acquisition includes the leasing of a processing facility located in Jurupa Valley, CA, with a production capacity of approximately 50 million pounds per year for recycled materials.
Expressing enthusiasm about the acquisition, LyondellBasell highlighted that it reinforces its U.S. presence and adds value for its customers and the plastic recycling rates on the West Coast. Drawing from its extensive experience in plastic recycling in Europe, the company aims to establish a state-of-the-art mechanical recycling facility to meet the growing demand for recycled products in the U.S. market.
Enhancing its Circular Economy Presence
LyondellBasell plans to use the newly-acquired mechanical recycling plant in California to produce post-consumer recycled resins from plastic waste feedstock. These recycled polymers will be marketed under the CirculenRecover brand, which is part of the company’s Circulen portfolio, aimed at promoting the circular economy. Operations at the new facility are set to commence in 2025.
The transaction aligns with LyondellBasell’s commitment to establishing a circular economy for plastic, addressing plastic waste in the environment, and meeting the increasing demand from customers for sustainable products. This move, combined with its previously-announced equity stake in the Cyclyx joint venture and investment in the Cyclyx Circularity Center in Houston, further strengthens LyondellBasell’s competitiveness in the U.S. recycled products market.
Financial Performance and Future Outlook
LyondellBasell reported adjusted earnings of $1.26 per share in the fourth quarter, down from $1.29 in the same period the previous year, with net sales totaling $9.929 billion, a 2.7% decrease from the prior-year quarter. The company’s earnings and sales fell short of the Zacks consensus estimates. Going forward, the company anticipates a sluggish first quarter in 2024 due to seasonally slow demand and economic uncertainty, although it expects low ethane raw material costs to bolster North American Olefins & Polyolefins profits and anticipates modest improvements in regional demand.
Stock Performance and Analyst Picks
Shares of LyondellBasell have seen a modest increase of 1.5% in the past year compared with a 15.4% decline in the chemical diversified industry. It presently holds a Zacks Rank #3 (Hold).
Some of the better-ranked stocks in the Basic Materials space include Carpenter Technology Corporation (CRS), Eldorado Gold Corporation (EGO), and Hawkins, Inc. (HWKN). Carpenter Technology Corporation carries a Zacks Rank #1 (Strong Buy), while Eldorado Gold Corporation and Hawkins, Inc. hold a Zacks Rank #2 (Buy). The consensus estimates indicate promising prospects for these entities, with significant growth rates and positive stock performance.
The consensus estimate for Carpenter Technology Corporation’s current fiscal year earnings suggests a remarkable surge of 248.3%, with a track record of consistently beating the Zacks Consensus Estimate in previous quarters. Eldorado Gold Corporation anticipates a projected earnings growth rate of 1,040% for the current year, while Hawkins, Inc. expects a year-over-year rise of 26% in its current fiscal year earnings.
Emphasizing the potential growth, Zacks Investment Research has highlighted five stocks with the potential to double in 2023. With the majority of these stocks currently flying under the Wall Street radar, there is a compelling opportunity to capitalize on their upward potential.
To conclude, LyondellBasell’s acquisition of the recycling facility marks a significant step toward strengthening its presence in the sustainable products market. As the company forges ahead with its ambitious endeavors, investors have ample reason to stay tuned for potential opportunities in the evolving landscape of recycling and waste management.
