LyondellBasell Industries NV Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Safety: 2024 total recordable injury rate 0.13, lowest injuries in history. Six sites with 10+ years of no injuries, APS segment reduced incident rates by 39%.
• Financial Results: 2024 earnings $6.40 per share, EBITDA $4.3 billion, cash from operations $3.8 billion, 90% cash conversion. Returned $1.9 billion to shareholders via dividends and repurchases.
• Strategic Initiatives: Unlocked ~$1.3 billion incremental normalized EBITDA since Capital Markets Day 2023. Value Enhancement Program (VEP) exceeded expectations, divested non-core EO&D business, acquired 35% share in NATPET. CLCS business grew 65% in 2024, targeting $1B incremental EBITDA by 2030.
• Capital Allocation: 2024 CapEx $1.8 billion, 2025 CapEx expected ~$1.9 billion, prioritizing high-return projects. Dividend increased 7% in May 2024, committed to returning 70% free cash flow to shareholders.

Segment Performance

• Olefins and Polyolefins Americas: Fourth quarter EBITDA was $496 million. Polyethylene volumes improved despite weak demand, assets operated at ~80% capacity. First quarter expected higher ethane/natural gas costs, planned maintenance, and impact from Winter Storm Enzo. In November, second investment in Cyclyx joint venture for circularity center in Texas.
• Olefins and Polyolefins Europe, Asia and International: Fourth quarter EBITDA loss of $146 million due to weak markets, lower rates, and downtime. 2025 expected improved demand but feedstock supply constraints. European strategic review ongoing, CLCS business grew with APK acquisition and MoReTec-1 construction.
• Refining: Fourth quarter EBITDA loss of $24 million. Shutdown activities ongoing, expected to be completed in first quarter, utilization rates ~35%.
• Intermediates and Derivatives: Fourth quarter EBITDA $250 million. Oxyfuel margins low, PO/derivatives volumes improved slightly. Styrene margins under pressure.
• Advanced Polymer Solutions: Fourth quarter EBITDA $15 million. Volumes pressured by automotive demand, but customer focus improved win rate. APS achieved record safety performance in 2024.
• Technology: Fourth quarter EBITDA $108 million. Catalyst volumes moderated, licensing revenue higher. First quarter expected to decline due to moderating licensing revenue.

Guidance

• 2025 CapEx expected ~$1.9 billion, prioritizing CLCS, flex capacity, and VEP projects.
• CLCS business targets $1 billion incremental EBITDA from 2 million tons of annual volumes by 2030.
• Anticipate modest seasonal demand improvements in first quarter, but impacted by turnarounds and winter storms. Confident in recovering demand from durable goods as macro conditions improve.

Risks

• Cyclical downturn in petrochemicals, structural shifts like slower global growth, higher energy costs, regulatory impacts.
• Supply constraints in circular plastics market delaying brand owner targets.
• Impact of tariffs on affordability and global trade. Unplanned downtime and maintenance affecting operations.

Question and Answer

Q: How much CapEx expected to reach 2 million-ton circular plastics?

A: Around 20% of total CapEx, with MoReTec-1 in Germany starting 2026, MoReTec-2 in Houston in progress.

Q: Dividend increases in 2025?

A: Confident due to strong cash flow generation, Board to decide in May.

Q: Capacity rationalization in Europe?

A: Ongoing, making progress in strategic assessments, seeing slowdown in license demand.