LyondellBasell Industries NV Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Safety: 2025 was the safest year in LyondellBasell's history with a record low total recordable incident rate despite elevated maintenance activity.
• Strategic Pillars: Focus on grow and upgrade core, build profitable circle and low carbon solutions, and step up performance and culture. Value enhancement program achieved $1.1 billion of recurring annual EBITDA in 2025, targeting $1.5 billion by 2028.
• Cash Improvement: Exceeded $600 million cash conservation goal in 2025, achieving $800 million, with a target of $500 million incremental cash in 2026, cumulative $1.3 billion.
• Capital Allocation: 2026 CapEx expected to be ~$1.2 billion, with $400 million for profitable growth and $800 million for sustaining investments.

Segment Performance

• Olefins and Polyolefins Americas: Fourth quarter EBITDA was $164 million, down from prior quarter due to higher feedstock costs, lower polyethylene margins, and maintenance. Operating rate was approximately 75% in Q4, with crackers operating at ~90%. Expect to operate at ~85% in first quarter.
• Olefins and Polyolefins Europe, Asia and International: Fourth quarter EBITDA was a loss of $61 million, impacted by seasonal lower prices, maintenance, weak demand, and competition from low-cost imports.
• Intermediates and Derivatives: Fourth quarter EBITDA was $205 million. Oxyfuels margins softened, propylene glycol demand improved, but acetyls were negatively impacted by a turnaround. Operated at ~75% in Q4, expected ~85% in first quarter.
• Advanced Polymer Solutions: Fourth quarter EBITDA was $38 million. EPS volumes were lower seasonally, but EBITDA was 55% higher y-o-y due to commercial execution and cost discipline.
• Technology: Fourth quarter EBITDA was $80 million, but first quarter expected lower due to seasonal licensing revenue decline.

Guidance

• Cash improvement plan targets an additional $500 million of incremental cash in 2026 compared to 2025 actuals, increasing cumulative target to $1.3 billion through end of 2026.
• 2026 CapEx expected to be ~$1.2 billion, with $400 million for profitable growth and $800 million for sustaining investments.
• 2026 effective tax rate expected to be approximately 10%, with cash tax rate ~10 percentage points higher.

Risks

• Industry margins deeply depressed, ~45% below historical averages.
• Global trade disruptions, low demand for durable goods, lower oil-to-gas ratio.
• Increased competition from imports in Europe, structurally higher energy costs.
• Geopolitical uncertainty impacting oxyfuels markets, keeping them volatile.

Question and Answer

Q: David Begleiter asked about the dividend yield and why not cut dividend to invest in growth projects.

A: Peter Vanacker responded that the team delivered strong cash from operations in 2025, overperformed on cash improvement plan, has a lean organization, and decisions on capital allocation are made by the Board with regular reviews.

Q: Patrick Cunningham inquired about CapEx guide for 2026.

A: Peter Vanacker and Agustin Izquierdo explained that 2026 CapEx is ~$1.2 billion, with $800 million for maintenance and $400 million for growth, due to postponing some turnarounds and diligent maintenance CapEx management.

Q: Frank Mitsch asked about monetizing the Houston refinery.

A: Peter Vanacker stated the plan continues, avoiding costly turnarounds, and remains open to options with the refinery.

Q: Jeff Secoskus asked about working capital in 2026.

A: Peter Vanacker and Agustin Izquierdo said working capital will be rebuilt in 2026 but factored into cash improvement plan, with expectations of moderate build.

Q: Vincent Andrews asked about oxyfuels market in 2026.

A: Peter Vanacker and Aaron Ledet said oxyfuels expected to normalize with seasonal improvements, but impacted by crude volatility and low inventories.

Q: Matthew Blair asked about polypropylene vs polyethylene recovery.

A: Peter Vanacker and Kimberly Foley discussed polypropylene's higher exposure to durable goods and construction, with expectations of recovery as demand and rationalization occur.

Q: Kevin McCarthy asked about U.S. Gulf Coast polyethylene market.

A: Kimberly Foley discussed low industry inventories, higher pricing, and supportive factors for price initiatives.

Q: Aleksey Yefremov asked about China's anti-involution policies.

A: Peter Vanacker explained ongoing discussions and anticipated rationalization in China, with various policies and capacity changes impacting the market.

Q: Michael Sison asked about OP Americas exports and margins.

A: Peter Vanacker and Kimberly Foley said OP Americas has lesser exports, with expectations of margin improvement as tariffs and supply chains normalize.

Q: Hassan Ahmed asked about capacity rationalization figures.

A: Peter Vanacker provided details on anticipated ethylene capacity rationalization globally, including Europe, China, Southeast Asia, and Japan.