LyondellBasell Industries N.V. (LYB) Earnings

Management highlights

### Portfolio Transformation and Operational Milestones - Completed the divestiture of four European assets during Q2, an important milestone in the company's portfolio transformation that strengthens portfolio competitiveness and cycle resilience. - The Bayport POTBA asset was safely restarted and ramped to full operating rates in June following unplanned Q2 downtime, enabling the company to capture ongoing favorable market conditions. - Portfolio optimization across all segments has shifted the company's asset base to lower positions on the cash cost curve, improving overall margin performance. - Organizational streamlining under the cash improvement program has delivered a 30% reduction in management layers across the entire company, enabling delegation of authority and reduced fixed costs. Oxyfuels Strategic Differentiation - Oxyfuels are high-octane clean gasoline blendstocks produced via proprietary POTBA technology, with a structural feedstock advantage over traditional crude-derived gasoline components. - 75% of oxyfuels production is based in the U.S., and the business benefits from integrated low-cost natural gas-derived methanol production. - Q2 2024 saw one of the strongest oxyfuel margin environments in recent years, driven by favorable feedstock differentials from higher crude prices and near-record gasoline crack spreads, with the restart of Bayport unlocking full value capture.

Guidance

- Olefins & Polymers: Expected to operate at ~70% utilization in Q3, aligned with expected softer seasonal summer demand. Lower Rhine water levels could lead to further downward adjustments to operating rates if levels remain low for an extended period. Demand for polyethylene and polypropylene is expected to remain resilient in Q3, with margins remaining elevated above pre-conflict levels. - Intermediates & Derivatives: Targeting ~85% operating rates in Q3 following the Bayport restart. Oxyfuels volumes and margins are expected to improve from seasonal demand strength and ongoing elevated gasoline crack spreads; POND demand is expected to remain soft but stable, with continued support from market share gains and industry rationalization. - Advanced Polymer Solutions: Seasonal demand is expected to moderate across automotive and other end markets due to typical Q3 OEM shutdowns, and higher raw material costs from global supply disruptions are expected to persist. Long-term transformation continues to improve business competitiveness and profitability. - Technology: Third quarter EBITDA is expected to moderate from Q2 levels to a more typical run rate, as catalyst demand normalizes after strong first half shipments, and new licensing activity remains muted amid slowing global polyolefins capacity growth. - Overall: Constrained global operating rates, lean product buffers, ongoing Middle East conflict risks, and resilient consumable demand are expected to support elevated margins through Q3.

Segment performance

1. Olefins & Polymers: Reported the strongest quarterly result since 2021, with EBITDA $337 million higher than Q1, including a $50 million gain from the sale of European emissions credits. The segment operated at ~75% utilization for the quarter, with olefins crackers running at ~85% utilization. It contributed 42% of total Q2 segment EBITDA. 2. Intermediates & Derivatives (IND): Q2 EBITDA was $386 million, a sequential increase driven by stronger margins across most businesses from Middle East conflict-driven global supply tightness. This improvement was partially offset by a $250 million EBITDA impact from unplanned downtime at the Bayport POTBA asset, pulling overall segment utilization down to ~65%. It contributed 49% of total Q2 segment EBITDA. 3. Advanced Polymer Solutions (APS): Q2 EBITDA was $78 million, with improved margins from disciplined pricing actions and cost optimization. First half 2026 EBITDA is over 50% higher than the same period last year. It contributed 10% of total Q2 segment EBITDA. 4. Technology: Q2 EBITDA was $74 million, in line with prior guidance. Profitability improved from licensing revenue milestones and stronger catalyst demand. It contributed 9% of total Q2 segment EBITDA.

Risks & headwinds

- Ongoing geopolitical uncertainty from the Middle East conflict continues to contribute to market volatility, disrupt supply chains, reduce product availability, and threatens further escalation that could tighten global supply further. - Low Rhine water levels in Europe are negatively impacting operations and may require further operating rate cuts if levels remain low for a prolonged period. - U.S. Gulf Coast hurricane season presents additional supply disruption risk that could tighten global polymer and feedstock supplies. - Unplanned downtime at key assets (including the Bayport POTBA asset and LaPorte syngas/acetyls unit) can create material negative impacts on quarterly profitability. - Persistently high crude and NAFTA feedstock prices could pressure margins in European and Asian end markets. - Macroeconomic pressures and affordability issues continue to soften automotive demand, while housing recovery remains delayed, keeping building and construction demand subdued.

Analyst Q&A

• Q: Analyst David Begleiter asked about a consultant forecast of a 10-cent polyethylene price decline in July, and why management might disagree with the forecast. /

  A: Management noted that the market backdrop remains highly dynamic amid the ongoing Middle East conflict, with crude, feedstock and polymer prices having already increased in early July. Global export pricing and volumes have risen across all regions, and China has shifted from exporting polymer in Q2 to importing in Q3 due to seasonal demand. Additional supply constraints from low European Rhine levels and U.S. hurricane season further support prices, leading management to expect prices to be flat or potentially rise through Q3.

• Q: Analyst Patrick Cunningham asked whether higher global polymer prices could lead China to ramp up operating rates quickly, reducing import demand in the second half of the year. /

  A: Management noted that China's Q2 increase in exports was a surprising temporary adaptation to Middle East conflict volatility, as China used unaffected coal-based chemical production and drew down inventory to offset reduced NAFTA feedstock supplies. China's ability to sustain higher exports is limited, and management is already seeing indicators that China is returning to being an importer, with temporary Q2 exports having only displaced regional production in Southeast Asia.

• Q: Analyst Jeff Sikoskis asked for an update on the Moratech advanced recycling project and U.S. acetyls assets. /

  A: The first Moratech unit in Wesseling is progressing on schedule, with startup expected in late 2027; the vast majority of the unit's capacity is already pre-sold to brand owners, and favorable European regulation is supporting higher-than-expected projected value capture. The second U.S. Moratech unit has been delayed as U.S. regulation is not advancing as quickly as Europe's. For U.S. acetyls, reliability issues at the LaPorte syngas unit continue to limit acetic acid and VAM production, but the site's methanol unit is running above benchmark rates, and management expects to return both products to full rates in Q3.

• Q: Analyst John Roberts asked whether the company will pursue bolt-on acquisitions as its balance sheet improves. /

  A: Management confirmed the capital allocation strategy remains unchanged: maintaining an investment-grade credit rating is the top priority, followed by funding maintenance capex for safe operations and supporting the dividend. Excess cash will first go to balance sheet strengthening and deleveraging, and M&A will only be considered opportunistically after these priorities are met.