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LyondellBasell's quarterly profit forecast is missed due to lower margins

LyondellBasell's shares fell 2.5% on August 1, as it struggled to meet Wall Street's expectations for the second quarter profit. The chemical manufacturer was also struggling with higher energy costs and lower margins.

The rising cost of energy is causing profit margins to shrink for North American chemical companies. This is due to the surge in power demand by data centers, which are energy-hungry.

The U.S. Energy Information Administration announced in April that the U.S. electricity consumption would reach new records between 2025 and 26 due to the rise of cryptocurrency and AI-focused data centers.

Chemical companies are also struggling because of a slump in demand and the rising cost of raw materials, particularly in Europe where a strict regulatory environment is forcing businesses to reassess how they do business in that region.

As part of its review of European assets, the company had exclusive discussions with Munich-based investment group AEQUITA regarding the sale of certain olefins and polyolefins in Europe.

LyondellBasell’s olefins, polyolefins, and Americas unit reported core adjusted earnings of $318 millions, down from $670million last year. The unit manufactures materials for construction and packaging, among other things.

The company anticipates that in the third quarter it will have improved North American integrated Polyethylene margins, due to the competition from planned maintenance in April, and higher prices, supported by strong domestic demand and increased export volumes.

According to LSEG, the company reported an adjusted profit per share of 62 cents in the April-June period, compared to analysts' estimates of 80 cents. Sumit Saha, Bengaluru. Vijay Kishore, editing.

(source: Reuters)