LyondellBasell Industries (LYB) revealed a powerful monetary efficiency in its fourth quarter and full-year 2023 earnings name, saying earnings of $8.65 per share with an EBITDA of $5.2 billion for the yr. The corporate surpassed its worth enhancement program objectives, attaining over $400 million in annual EBITDA enhancements.

LyondellBasell additionally detailed its strategic focus, which incorporates rising its core enterprise, advancing in round and low carbon options, and enhancing efficiency and tradition. Notably, the corporate goals for vital EBITDA development by 2027 and is realigning assets, together with divesting non-core companies.

The acquisition of a 35% stake in a Saudi-based three way partnership and an settlement to promote its ethylene oxide and derivatives enterprise have been among the many strategic strikes highlighted.

Key Takeaways

• LyondellBasell achieved $8.65 earnings per share and a $5.2 billion EBITDA in 2023.
• The corporate exceeded its worth enhancement program goal, including over $400 million to its annual EBITDA.
• It goals for $2 billion in incremental normalized EBITDA by 2025 and $3 billion by 2027.
• LyondellBasell plans to divest non-core companies and spend money on round and low carbon options.
• Money from operations totaled $4.9 billion in 2023, with a 98% money conversion charge.
• Over $1.8 billion was returned to shareholders, and the quarterly dividend elevated by 5%.
• The corporate acquired a 35% stake in NATPET, a polypropylene producer, anticipated to shut within the first half of 2024.

Firm Outlook

• LyondellBasell is redirecting assets from non-core companies to deal with its strategic development areas.
• The corporate is dedicated to disciplined capital allocation and offering aggressive shareholder returns.

Bearish Highlights

• The corporate acknowledges challenges in China, with barely destructive margins anticipated to enhance within the second half of the yr.
• Profitability of the O&P EAI enterprise is a priority, with actions taken together with shutting down a line in Brindisi.

Bullish Highlights

• The corporate has applied initiatives that generated over $300 million in EBITDA, based mostly on projected 2023 margins.
• LyondellBasell plans to allocate $800 million for profit-generating development initiatives in 2024.

Misses

• There have been no particular misses talked about within the supplied context.

Q&A Highlights

• The NATPET three way partnership’s present capability is round 400KT, with potential growth to 1 million tons.
• Payout targets are based mostly on free money circulate, with sustainable CapEx at $1.2-1.3 billion and development CapEx at $2-3 billion yearly.

LyondellBasell’s strategic progress and monetary outcomes mirror the corporate’s dedication to development and shareholder worth. With a transparent deal with enhancing its core enterprise, increasing into worthwhile round and low carbon options, and sustaining a disciplined method to capital allocation, the corporate is poised for continued success within the coming years. The acquisition of a stake in NATPET underscores this technique, probably creating new income streams and alternatives for development. Regardless of some challenges, notably within the Chinese language market, the corporate’s management is taking proactive steps to enhance profitability and optimize operations. As LyondellBasell strikes ahead with its long-term technique, traders and stakeholders can anticipate a deal with environment friendly money technology and strong monetary efficiency.

InvestingPro Insights

LyondellBasell Industries (LYB) has demonstrated resilience with a sturdy monetary efficiency, as mirrored within the latest earnings name. To offer a deeper understanding of the corporate’s present monetary well being and potential, let’s delve into some key metrics from InvestingPro.

InvestingPro Knowledge highlights a market capitalization of $30.15 billion, showcasing the corporate’s vital presence within the business. The P/E Ratio stands at a pretty 11.67 when adjusted for the final twelve months as of Q3 2023, indicating a probably undervalued inventory in comparison with earnings. In the meantime, the corporate’s income for a similar interval reached $41.38 billion, regardless of a income development decline of twenty-two.03%. This means that whereas the corporate’s top-line gross sales have confronted headwinds, its profitability metrics stay robust.

The InvestingPro Suggestions supply strategic insights for traders contemplating LYB. One tip highlights the corporate’s dividend yield, presently at 5.38%, which is especially interesting for income-focused traders. One other tip factors out the corporate’s honest worth, with InvestingPro’s evaluation suggesting a goal of $130.03, considerably greater than the earlier shut worth of $94.61. This discrepancy signifies potential upside for the inventory.

For these trying to discover additional, InvestingPro gives an array of extra suggestions, presently providing a particular New 12 months sale with reductions of as much as 50%. To reinforce your funding evaluation, use coupon code “SFY24” for an additional 10% off a 2-year InvestingPro+ subscription, or “SFY241” for an extra 10% off a 1-year subscription. These presents can equip traders with deeper insights into LyondellBasell’s monetary standing and future outlook, complementing the strategic development areas and shareholder worth highlighted within the article.

Full transcript – LyondellBasell Industries NV (NYSE:) This autumn 2023:

Operator: Good day, and welcome to the LyondellBasell teleconference. On the request of LyondellBasell, this convention is being recorded for immediate replay functions. [Operator Instructions] I am going to now flip the convention over to Mr. David Kinney, Head of Investor Relations. Sir, it’s possible you’ll start.

David Kinney: Thanks, operator. Earlier than we start the dialogue, I want to level out {that a} slide presentation accompanies right now’s name and is obtainable on our web site at www.lyondellbasell.com/investorrelations. Right now, we shall be discussing our enterprise outcomes, whereas making reference to some forward-looking statements and non-GAAP monetary measures. We consider the forward-looking statements are based mostly upon affordable assumptions, and the choice measures are helpful to traders. Nonetheless, the forward-looking statements are topic to vital threat and uncertainty. We encourage you to be taught extra concerning the elements that would lead our precise outcomes to vary by reviewing the cautionary statements within the presentation slides and our regulatory filings, that are additionally obtainable on our Investor Relations web site. Feedback made on this name shall be in regard to our underlying enterprise outcomes utilizing non-GAAP monetary measures, corresponding to EBITDA and earnings per share, excluding recognized objects. Further paperwork on our Investor web site present reconciliations of non-GAAP monetary measures to GAAP monetary measures, along with different disclosures, together with the earnings launch and our enterprise outcomes dialogue. A recording of this name shall be obtainable by phone starting at 1:00 p.m. Jap Time right now till March 2, by calling 877-660-6853 in the USA and 201-612-7415 outdoors the USA. The entry code for each numbers is 13742056. Becoming a member of right now’s name shall be Peter Vanacker, LyondellBasell’s Chief Govt Officer; our CFO, Michael McMurray; Ken Lane, our Govt Vice President of World Olefins and Polyolefins; Kim Foley, our EVP of Intermediates & Derivatives and Refining; and Torkel Rhenman, our EVP of Superior Polymer Options. Throughout right now’s name, we are going to deal with fourth quarter and full yr 2023 outcomes, together with an replace on LYBs strategic progress. We may also focus on present market dynamics and our near-term outlook. With that being mentioned, I might now like to show the decision over to Peter.

Peter Vanacker: Thanks, David, and welcome to all of you. We admire you becoming a member of us right now as we focus on our fourth quarter and full yr 2023 outcomes. Let’s start as we all the time do, with our security outcomes on Slide 3. Throughout 2023, our staff and contractors demonstrated their dedication to excellent security efficiency. LYBs complete recordable damage charge was 0.14, which is roughly 20% decrease than the typical of the prior three years. I need to congratulate our APS segments the place accidents have been 38% decrease than 2022, a big enchancment from historic ranges. We all the time use security efficiency as a number one indicator of operational excellence and enterprise efficiency. However there isn’t any larger worth than seeing each member of our crew return dwelling to their households on daily basis in the identical well being has once they started to work their working day. So flip to Slide 4 to debate our monetary outcomes. 2023 was one other difficult yr for petrochemicals. Whereas vitality costs moderated in an surroundings of geopolitical unrest, markets have been extraordinarily cautious attributable to uncertainty about inflation and the potential for a extra pronounced downturn in financial exercise. Reported GDP development in U.S. and China improved relative to 2022, the expansion in petrochemicals was far under norms for our business. Towards that backdrop, LYB delivered earnings of $8.65 per share with an EBITDA of $5.2 billion. Money technology was distinctive, and resulted in $4.9 billion of money from operations. Now we have a extremely environment friendly money conversion ratio of 98%. We ended the yr with $7.6 billion of liquidity supported by a powerful funding grade stability sheet. And we exceeded our price of capital with an 11% return on invested capital. In March of final yr, we efficiently launched our new technique at our Capital Markets Day in New York. Now let’s flip to Slide 5 and briefly evaluation the technique. Our purpose was to create focus, readability, and alignments about course LyondellBasell could be shifting over the following 5 years and supply a transparent imaginative and prescient of what the corporate would appear to be in 2027. Our technique is constructed round three pillars, rising and upgrading the core, constructing a worthwhile round and low carbon options enterprise and stepping up efficiency and tradition. In rising and upgrading the core, we’re investing in companies that match with our aggressive benefits and long-term technique. Our round and low carbon options enterprise is driving management in circularity and addressing the huge demand for these merchandise from our clients and society. Within the third pillar, we’re reworking the tradition of LYB to embed a extra complete view of worth creation, whereas persevering with to acknowledge that stringent price administration is important in our business. On Slide six, we spotlight our progress on our technique in 2023 and the work underway over the following few years in direction of over 2027 objectives. In simply 10 months, since launching our technique final March, LyondellBasell has unlocked practically 1/3 of the $3 billion of incremental normalized EBITDA that we’re concentrating on for 2027. The profitable startup of the PO/TBA plant this yr is a significant step ahead in rising and upgrading our core by including roughly $450 million to our normalized EBITDA. And I am more than happy to report that our price enhancement program is much exceeding our preliminary expectations. In 2023, the VEP achieved a yr finish run charge of greater than $400 million of midcycle recurring annual EBITDA enhancements, Michael will share extra particulars on the progress of the VEP in a number of moments. As proven on the slide, we now have quite a few workstreams underway to construct in direction of our strategic objectives of $2 billion of incremental normalized EBITDA by 2025, and a complete of $3 billion by 2027. With the introduced sale of the ethylene oxide and derivatives enterprise to Ineos for $700 million, we’re redirecting assets away from non-core companies. The deal we introduced in January to amass 35% of NATPET in Saudi Arabia for roughly $500 million is only one instance of how we’re rising our core price advantaged olefins, and polyolefins companies. We’re making nice strides and constructing robust foundations for our round and low carbon options enterprise. In 2023, we took a ultimate funding resolution for our first tranche of superior recycling capability in Germany, utilizing our proprietary catalytic MoReTec know-how. And we’re constructing partnerships to supply waste plastic to produce our app in Germany, whereas additionally securing waste plastic in Houston to produce our subsequent funding a sophisticated recycling capability. And the VEP program isn’t a one-time initiative, Michael will describe our elevated targets for 2024 and past. Whereas we now have loads of work forward of us, I need to congratulate our crew on the substantial progress we achieved on our strategic journey in 2023, making certain a sturdy platform for long term worth creation and optimistic leverage to any market turnarounds. On Slide seven, let’s check out the steps forward to ship on our objectives. We’ll proceed to develop and improve our core companies by specializing in advantaged feedstocks in rising markets, the place LYB can construct or lengthen our main market place. Our new three way partnership in Saudi Arabia is one instance of how we are going to do that. As we add new positions, we are going to proceed to evaluation our portfolio for companies and belongings that aren’t aligned with our long-term technique. The divestiture of EO and derivatives enterprise, the sale of our Australian polypropylene enterprise. The shutdown of a polypropylene line in Italy and the exit of the refining enterprise for all examples of how we’re sharpening the main target of our enterprise portfolio. The fast progress of the LYB worth enhancement program additionally contributes to our development via low-cost capability debottlenecks and productiveness enhancements. We’re making good progress on constructing the foundations for our round and low carbon options enterprise as we work in direction of our purpose of $500 million of incremental EBITDA by 2027 and $1 billion by 2030. And our VEP isn’t solely delivering development and productiveness, the VEP additionally helps the third pillar of our technique to step up efficiency and tradition by instilling a value-based mindset throughout the corporate. With quite a few initiatives to enhance margins via buyer and business excellence embedded within the VEP. And our work is to rework our advance polymer options enterprise can also be an essential a part of our work to step up efficiency and tradition. All of our progress is supported by our foundations of environment friendly money technology, disciplined capital allocation, and our funding grade stability sheet. We’re leveraging partnerships the place it matches to realize development with capital effectivity. And we’re pursuing a really worth centered funding program. And we stay steadfast in our assist for a safe, aggressive and rising dividends as a part of our dedication to aggressive shareholder returns. And now, I’ll flip the decision over to Michael to debate the main points of our monetary progress.

Michael McMurray: Thanks, Peter. And good morning, everybody. Please flip to Slide eight and let’s check out the progress of our price enhancement program. As Peter talked about, LYBs worth enhancement program far exceeded our preliminary expectations in 2023. After we launched this system, we thought we might obtain a 2023 year-end run charge of $150 million of midcycle recurring annual EBITDA enchancment. With excessive engagement and fast execution, our crew achieved a run charge of greater than $400 million by year-end 2023. Now we have a powerful administration system in place for our VEP program. Our crew has screened greater than 13,000 concepts, and greater than 1900 of those concepts have superior to the execution prepared stage of our course of. By the top of 2023, we executed on roughly 450 of those initiatives. Our system is powerful and disciplined, and our inner and exterior auditors have validated our processes. We presently consider this effort will add a complete of $600 million of recurring annual EBITDA by the top of 2024 and as much as a billion {dollars} by the top of 2025. It is a vital enhance from our preliminary goal of $750 million that we introduced final March, pushed by the enthusiastic [indiscernible] of our colleagues and the tangible outcomes that we now have delivered thus far. The LYV worth enhancement program is offering significant contributions to our strategic monetary objectives. And we’ll proceed to take action as we transfer ahead. On Slide 9, let me share extra particulars concerning the progress on our VEP program throughout 2023. Our targets for this system are described as year-end run charges relative to 2021 volumes, and utilizing common margins from 2017 to 2019, a time interval that gives a very good approximation of mid cycle margins. Via greater than 450 initiatives, we generated over $300 million of VEP EBITDA from this system based mostly on 2023 margins. This displays the web recurring enhancements all year long relative to 2021 quantity, product combine and value. Now, let me spotlight a number of of the initiatives from final yr. At our Lake Charles built-in polyethylene three way partnership, we automated controls for a water therapy unit that lowered guide operations and water consumption. With a small funding, we have been in a position to scale back our LYB share of price by $800,000 yearly. In our oxy fuels enterprise, our price advantaged U.S. manufacturing is exported in vessels to markets around the globe. We labored with one in all our terminal suppliers to encourage their funding in a vapor restoration system that allowed LYB to double decile loading charges to cut back demerge price and vapor emissions for a internet recurring good thing about $1 million per yr. By investing assets to be taught extra concerning the wants of our clients, our polymer product improvement crew allotted assets for brand new merchandise to serve demanding functions and wired cable sheathing for subsea infrastructure markets. This initiative improved recording profitability by no less than $300,000 per yr. We hope these examples gives you some perception into the tons of of small initiatives that we now have that we count on so as to add as much as $1 billion of midcycle recurring annual EBITDA to LYBs run charge by the top of 2025. Please flip to Slide 10. And let me start by highlighting the excellent Money Era from our enterprise portfolio throughout 2023. LYB generated a complete of $4.9 billion of money from working actions over the previous yr. Money available elevated to $3.4 billion on the finish of the fourth quarter. Throughout 2023, we achieved money conversion of 98% effectively above our long-term goal of 80%. Our money conversion was bolstered by working capital discount of roughly $700 million through the fourth quarter. Nearly all of the working capital profit was from decrease receivables and inventories. We count on our working capital wants will enhance through the first quarter. Our environment friendly money technology allowed the corporate to return greater than $1.8 billion to LyondellBasell shareholders in 2023. This represents 53% of our $3.4 billion of free money circulate for the yr. Let’s proceed with Slide 11 and evaluation the main points of our capital allocation over the previous yr. As Peter talked about, we’re dedicated to self-discipline capital allocation as we execute our technique and keep our strong funding grade stability sheet. Throughout 2023 money from working actions absolutely funded $1.6 billion in dividends $210 million in share repurchases and our capital funding program. In Might, we elevated our quarterly dividend by 5%, marking the thirteenth consecutive yr of annual dividend development. This yr, we invested 1.5 billion in capital expenditures. We reached an essential milestone with the profitable startup of our new PO/TBA asset in 2023. With the completion of this world scale mission, our future capital expenditures shall be more and more centered on a portfolio of smaller initiatives to advance our technique. This contains investments in small revenue producing initiatives, built-in hubs for round options, and tons of of initiatives inside the worth enhancement program. We ended the yr with $3.4 billion of money and short-term investments, then $7.6 billion of money and obtainable liquidity. In step with our strategic deal with management and sustainability. We issued our preliminary inaugural inexperienced bond for $500 million LYBs strong stability sheet positions as effectively to maneuver ahead on our long run technique through the yr forward. One final remark. We added over a billion {dollars} of money to our stability sheet in 2023 because of robust execution amid difficult market circumstances. Because of this, we’re carrying about two occasions our said minimal of 1.5 billion. Now we have constructed a bit additional cash due to the difficult market circumstances and unsure financial outlook that we now have been navigating. That mentioned our capital allocation priorities stay unchanged. And we stay dedicated to returning 70% of our free money circulate to shareholders over the long-term. Now I want to present an outline of the quarterly outcomes for every of our segments on Web page 12. LYBs enterprise portfolio delivered $910 million of EBITDA through the fourth quarter. Our decrease outcomes mirror a big decline in gasoline crack spreads in seasonally decrease demand through the fourth quarter. Decrease gasoline cracks bedspreads negatively impacted our refining outcomes oxy fuels within the intermediates and Driftwood section and the worth of coproduct fuels and olefins and polyolefins Americas. Through the quarter, decrease ethane in vitality price and elevated polyethylene exports benefitted our O&P Americas enterprise. Total, olefins and polyolefins demand remained gentle, notably in Europe, the place utilization charges remained low. Decrease demand and better uncooked materials prices negatively impacted our superior polymer resolution section. Throughout the portfolio, a noncash LIFO stock valuation cost decreased pre tax for quarter outcomes by roughly $55 million. As a reminder, the LIFO influence displays adjustments in stock valuation over the complete yr and it is not essentially restricted to fourth quarter valuations. Earlier than we focus on our section ends in element, let me focus on our capital expenditure plans for 2024, our capital plan contains roughly $800 billion for revenue producing development initiatives, and $1.3 billion of sustaining funding to maintain our belongings operating safely and reliably. The elevated revenue producing capital contains investments to develop our round and low carbon options enterprise, in addition to investments to decrease the carbon footprint of our current asset base, notably in Europe. Funding required to drive our price enhancement program is included in our CapEx plan. We count on our 2024 efficient tax charge shall be roughly 20%. And our money tax charge shall be a number of share factors greater. Within the appendix of the slide deck, we now have supplied extra 2024 modeling info, together with impacts for main plant upkeep prices related to the exit from our refining enterprise than different helpful monetary metrics. With that, I am going to flip the decision over to Ken. Ken?

Ken Lane: Thanks, Michael. Let’s start the section discussions on Slide 13 with the efficiency of our olefins and polyolefins Americas segments. Fourth quarter EBITDA was $604 million. Through the quarter a big lower in co-product values negatively impacted olefin’s margins. Polyolefins costs have been steady domestically, whereas a really robust export quantity led to some decrease pricing in our general portfolio. Robust demand from export markets continues to drive elevated polyethylene volumes, and we did not see the everyday seasonal slowdown. We operated our belongings at roughly 85% of nameplate capability to match market demand and continued to actively handle working capital. Fourth quarter EBITDA included a LIFO stock valuation profit of roughly $75 million. Through the first quarter, we count on polyethylene costs to stay agency with modest enhancements in home demand and ongoing power in export markets. We anticipate ethane and vitality prices will stay favorable for our belongings within the area, offering some margin tailwinds. Total, we count on to function our O&P Americas belongings at a mean of roughly 80% through the first quarter, barely decrease than fourth quarter 2023 attributable to plant upkeep. In December, we signed two new renewable energy buy agreements. With these agreements, we have achieved nearly 90% of our purpose to obtain no less than 50% of our international energy from renewable sources by 2030. In complete, we now have 12 agreements in place, representing greater than 1.3 gigawatts of renewable energy capability. As we talked about, final quarter, we introduced our funding in Cyclyx, a three way partnership with Agilyx and ExxonMobi. This partnership is targeted on growing plastic waste, recycling infrastructure to enhance circularity. In December Cyclyx introduced the ultimate funding resolution to construct the primary Cyclyx circularity heart in Houston. The circularity heart will deal with growing plastic waste recycling choices, via higher sourcing and sorting of plastic waste. The power may have the capability to supply greater than 130,000 tons of plastic feedstock per yr for superior and mechanical recycling and is anticipated to start out off in 2025. Now, please flip to Slide 14 to evaluation the efficiency of our olefins and polyolefins. Europe, Asia and worldwide section. Through the quarter, European markets remained weak with softer seasonal demand and decrease client confidence. Polymer costs have been modestly greater with an improved gross sales combine and steady naphtha feedstock prices. Because of the low demand, we operated our belongings at charges of roughly 65% through the quarter. The mixed influence of the weak demand and low charges result in a fourth quarter EBITDA lack of $87 million. As we transfer into 2024, we count on weak European demand will stick with ongoing client uncertainty. Nonetheless, we’re seeing modest enhancements in orders as some clients start to restock and search native provide as imports shifting via the Pink Sea are disrupted. We count on to function our European belongings at a charge of 75% through the first quarter. Demand in China stays muted as clients handle inventories with the method of the lunar new yr amid a sluggish financial surroundings. As Peter talked about earlier, we’re making nice progress on our technique to develop and improve our core companies. Our latest announcement to amass a 35% share of naphtha displays our deal with belongings which have long-term benefit. However we’re additionally shifting away from the belongings that may’t ship long-term competitiveness, as demonstrated by final yr’s resolution to shut one in all our two polypropylene belongings in Brindisi, Italy. We’re additionally making good progress with constructing our round and low carbon enterprise. Through the fourth quarter, we made the ultimate funding resolution to construct our first business catalytic superior recycling plant at our Wesseling Germany website. With an estimated capability of fifty,000 tons per yr this plant will make the most of our differential MoReTec superior recycling know-how. And similar to in Houston, we’re collaborating with companions to safe plastic waste feedstock in Germany. In December, we acquired a minority share of Supply One plastics, a plastic waste sourcing firm in Germany. Supply One will present the vast majority of the processed plastic waste feedstock to our new MoReTec belongings. Via our built-in hub mannequin, we’re establishing an built-in round worth chain at scale. Now please flip to Slide 15. And let’s take a better take a look at our new NATPET three way partnership. A couple of weeks in the past, we introduced our settlement to amass a 35% share of nationwide petrochemical industrial firm or the place NATPET from Alujain Company and Yanbu, Saudi Arabia. The three way partnership is a superb instance of how we’re rising our core companies with benefit of the belongings by leveraging LYBs main know-how and international market attain. Right now, NATPET consists of 400,000 tons of propane dehydrogenation or PDH capability that converts price benefit Saudi propane into propylene monomer to feed a 400,000 ton polypropylene unit using LYBs proprietary Spheripol know-how. The belongings have been operational since 2009 and have generated an annual common of U.S.$155 million in EBITDA over the 5 years from 2018 to 2022. NATPETs PP merchandise serve a various vary of consumers throughout international markets. As a part of the transaction, LYB will leverage our international advertising community to promote a majority of the product on behalf of internet pet creating a brand new income stream for LYB. NATPETs belongings are first quartile which have the benefit of sourcing native Saudi propane feedstock at a reduction to international costs. Additionally our funding in NATPET gives a platform for continued development. In 2022, NATPET was awarded a brand new feedstock allocation that would assist extra capability. The companions are evaluating a second PDH PP asset on the location that might profit from significant synergies. Beforehand, Alujain chosen LYB sphere zone polypropylene know-how for the potential growth. The high-performance polypropylene options enabled by our proprietary sphere zone know-how gives the potential to develop NATPETs manufacturing into new functions and markets. We count on our funding in NATPET will exceed our 12% goal for unlevered inner charges of return. The extra capability might present even greater returns. We count on the transaction will shut within the first half of 2024 following regulatory approvals and different customary closing circumstances. With that, I’ll flip the decision over to Kim.

Kim Foley: Thanks, Ken. Please flip to Slide 16, as we check out our intermediates and derivatives section. Fourth quarter EBITDA was $265 million. Oxyfuel margins declined attributable to a big lower in gasoline spreads in addition to an elevated provide of oxyfuels after business downtime through the third quarter. Direct margins have been pressured attributable to greater benzene feedstock prices, LIFO stock expenses have been roughly $95 million. Within the fourth quarter we acknowledged an impairment of $192 million associated to our PO/SM three way partnership within the Netherlands. We operated our belongings at a charge of roughly 70% through the fourth quarter attributable to low demand in addition to deliberate and unplanned downtime throughout most companies. As we start the primary quarter oxyfuel margins stay much like fourth quarter ranges. We anticipate greater volumes throughout the section after downtime within the fourth quarter and plan to function throughout the IMD section at roughly 75% within the first quarter. These working charges mirror the influence of the latest winter freeze occasion, leading to unplanned downtime at our U.S. Gulf Coast belongings. In December, we introduced an settlement to divest our ethylene oxide and by-product enterprise to Ineos for $700 million. As Peter talked about earlier, we’re taking decisive actions to develop and improve that companies and belongings that align with our long-term technique. Whereas exiting companies the place LYB doesn’t have a path to a number one place. We count on the transaction will shut within the second quarter following regulatory approvals, and different closing circumstances. Please be aware that the agreed transaction worth is pre-tax, and that these belongings are closely depreciated. Now let’s flip to Slide 17 and focus on the outcomes of the refining section. Fourth quarter EBITDA was $51 million, together with expenses of $40 million of LIFO stock valuation refining margins compressed attributable to decrease gasoline crack spreads. Through the quarter we operated the refinery at 85% of capability attributable to deliberate and unplanned downtime, with a mean crude charge of 230,000 barrels per day. Within the close to time period, we count on gasoline crack spreads will enhance offset by decrease distillate cracks. We plan to function the refinery directionally 80% of capability within the first quarter, together with a deliberate Coker outage with an estimated EBITDA influence of $50 million. Our crew stays extremely centered on secure and dependable operations as we proceed to run our refining belongings via no later than the top of the primary quarter of 2025. With that, I’ll flip the decision over to Torkel.

Torkel Rhenman: Thanks, Kim. Now let’s evaluation the outcomes of our superior polymer options section on slide 18. Fourth quarter EBITDA declined to $12 million. Margins have been pressured by greater uncooked materials price and volumes decreased attributable to seasonally decrease fourth quarter demand with a slowdown in December attributable to buyer outages. Doubtless stock valuations advantages have been $10 million. Trying forward, we see indicators of market restoration and count on modest demand enchancment within the first quarter. This yr, we continued our transformation journey with superior polymer options. APS ends in 2023 have been decrease than 2022 and never mirrored of our monetary expectations for this enterprise. Success with APS clients is basically based mostly on project-by-project qualification. Right now’s underperformance is indicative of our low success charge in gaining new {qualifications} throughout prior quarters. Nonetheless, our laser deal with our clients is gaining momentum. Now we have seen a step up in our latest surveys for buyer satisfaction. With a company that’s centered and accountable. We’re making regular progress as we rebuild our mission development funnel. Our development pipeline is already delivering. Through the fourth quarter of 2023, volumes improved by 2.5% over the prior yr. I need to congratulate the APS crew for attaining report security efficiency in 2023. I actually consider our buyer focus, as measured by our latest buyer satisfaction survey, our progress in refilling our development funnel and our superior security outcomes displays our consideration to element that gives a number one indicator for operational efficiency and eventual monetary outcomes. With that, I’ll return the decision again to Peter.

Peter Vanacker: Thanks, Torkel. I want to thank your entire LyondellBasell crew for delivering such resilient outcomes throughout a really difficult yr. To shut out on the segments, let’s flip to Slide 19 and focus on the outcomes for our know-how enterprise on behalf of Jim Seward. Through the fourth quarter, licensing income moderated after exceptionally robust ends in the third quarter because of the timing of licensing milestones. Nonetheless, EBITDA for the section exceeded the fourth quarter of the prior yr. Fourth quarter catalyst volumes have been greater than any quarter because the third quarter of 2022. First quarter outcomes for the know-how segments have been anticipated to enhance attributable to elevated licensing income and an extra rise in catalyst volumes in comparison with the fourth quarter of 2023. As Ken talked about earlier, we are going to make the most of our proprietary MoReTec know-how as we construct our first business scale superior recycling plant in Germany. I am very happy with the work our R&D crew launched into years in the past to develop this differential and benefit know-how from lab to business scale. Let me now summarize our outlook with Slide 20. As we start 2024, the vast majority of our companies are persevering with to face the sluggish demand seen within the fourth quarter of 2023. However we’re seeing a number of early indicators of enchancment. Our North American O&P enterprise is seeing modest demand enhancements. In Europe, order tendencies have been enhancing from a really low degree as our O&P clients start to pursue modest restocking. For the yr, we count on regular seasonal demand enhancements to start close to the top of the primary quarter and proceed via the summer time. As we progress via the second half of the yr, we count on demand to learn from moderating rates of interest and lowered inflation. Sturdy items are a vital marketplace for LYBs merchandise. Demand for sturdy items lacked the economic system throughout 2022 and 2023. As markets digested the extraordinary excessive ranges of client exercise that prevailed throughout pandemic period stimulus. We count on that moderating rates of interest, lowered inflation and infrastructure-related stimulus spending will start to assist a gradual return to a more healthy demand for sturdy items through the second half of this yr. China is the biggest marketplace for chemical compounds, exceeding North America and Europe mixed, and we proceed to observe intently for focused stimulus and different measures that would drive improved financial development in China. Within the meantime, LYB will proceed to advance on our strategic objectives. We’re actively managing our portfolio to develop and improve our core companies. We’ll proceed to see actions supporting the expansion of regional hubs that can function the engines for our worthwhile round and low-carbon options enterprise. And our work to embed worth creation into our company tradition will proceed to ship outcomes via our price enhancement program. We’re now happy to take your questions.

Operator: [Operator Instructions] Our first query comes from the road of Stephen Richardson with Evercore ISI. Please proceed along with your query.

Stephen Richardson: Peter, I used to be questioning when you might simply dig in slightly bit on the expectations for the second half and perhaps just a bit bit extra on the O&P companies. What sort of restoration are you sort of underwriting in your outlook? And the way do you suppose that performs out and any guideposts past the statements on durables we must be fascinated with because the yr progresses?

Peter Vanacker: Thanks, Stephen. As regular, excellent query out of your aspect. To start out with, as we alluded to, I imply, we’re nonetheless a bit prudent on the steering for Q1. However once we are trying on the second half of this yr, a few issues that I need to level to. This has been the longest downturn that we now have seen so far as I can look again in our historical past. So one would count on I imply that there shall be, when you take a look at inflation charges taking place, rates of interest taking place, extra client confidence in Europe perhaps additionally in China, that demand would go up. So from a requirement aspect, one would count on that demand would go up. And that covers not solely the O&P enterprise, but in addition when you take a look at sturdy teams, particularly. As everyone knows, demand has been very low final yr in sturdy items, which, after all, has so much to do with very excessive rates of interest and subsequently, client conduct so additionally, you’d count on that sturdy items demand would go up, I imply, particularly within the second half of this yr. The USA, as you realize, has been fairly strong. Now we have been in a position to navigate. You see strong margins additionally on the polyethylene aspect. And in addition right here, as you realize, inflation charges are taking place. You see already slightly little bit of indications. There may be extra home builds, homes [indiscernible] which are being bought. And that, after all, has a direct influence on demand for sturdy items.

Operator: Our subsequent query comes from the road of Steve Byrne with Financial institution of America. Please proceed along with your query.

Steve Byrne: Sorry about that. Pardon me, I used to be on mute sorry about that. Simply concerning the napped three way partnership, it looks as if it is roughly 10x EBITDA, is that roughly proper? And do you see potential for this funding to generate a better EBITDA down the street? And I simply questioning the idea for that funding, given it looks as if polypropylene bit oversupplied. And I suppose my different query on it will be what are the contract phrases for the propane that you simply get from Saudi, any threat that worth might get escalated down the street.

Peter Vanacker: Thanks, Steve. Additionally a very good query on NATPET. Initially, I imply, we’re more than happy that we have been in a position to signal this deal that has been work of a core crew in our firm the place I used to be personally, after all, deeply concerned throughout fairly an essential time period to return to this conclusion. While you take a look at the amount of cash that we paid and Ken alluded to that in his remarks, then one can’t simply take a look at the EBITDA, mid-cycle EBITDA to $150 million for your entire firm. However what you do not see and what must think about is the truth that we’re the trail to market, so we’re producing worth for the corporate that comes out of promoting the merchandise outdoors of Saudi Arabia to our different markets. And subsequently, additionally strategically essential as a result of we now have a really sustainable low-cost feedstock foundation that we now have negotiated that’s included within the deal in order that we’re higher positioned in Polypropylene to go to sure markets the place perhaps right now, we do not have the very best place. And right here, let’s not overlook that we did shut ’19 at our Brindisi belongings in Italy as effectively. Along with that, as we alluded to, we now have the revenue streams generated out of our license agreements. Now we have the chance to proceed to take a position with the second line subsequent to the prevailing traces to seize synergies there. And that is why Ken alluded to the truth that with the present deal, we’re in iron ore, which is above 12%. However then as we do the second step, then we’d be greater to say, I imply, fairly greater than 12% or no ultimate funding resolution but, however it’s also a part of the consideration in doing that first.

Michael McMurray: Steve, within the a number of might be nearer to 9 versus 10 only for readability.

Peter Vanacker: With out taking into account, I imply, advertising charges, et cetera, et cetera.

Operator: Our subsequent query comes from the road of Patrick Cunningham with Citi. Please proceed along with your query.

Patrick Cunningham: Perhaps inside the $800 million in development CapEx allotted for this yr, how a lot of that’s straight associated to round and low-carbon options? And past that, what ought to we count on when it comes to inorganic development and extra investments in that area for 2024?

Peter Vanacker: I’ll simply consult with the Capital Markets Day, we mentioned about 15% over the cycle. Michael, do you need to add one thing to that, for subsequent yr?

Michael McMurray: Sure. I imply what I might say is that the steering that we gave at Capital Markets Day for CapEx stays intact. As a reminder, we mentioned over the interval, ’23 to ’25 on common, we would spend $2 billion. We guided to $2.1 billion right now. And as Peter mentioned, the expectation for the CLC SR circularity enterprise it is about 15% to twenty% over the interval. Now particularly round inorganic development. I might in all probability say a few issues. I believe at our Capital Markets Day, we have been clear that we hope to get some M&A completed over the following few years. I believe we have been fairly clear the factors that we shared with regard to rising and upgrading the core. I believe the Sasol (NYSE:) three way partnership, our new PO/TBA facility, the circularity investments that we have made and the refining exit are all nice examples after which our latest announcement of our EO and D exit is one other nice instance. And fairly frankly, it was an awesome valuation with the very best proprietor mindset. We additionally shared our method to development via M&As and joint ventures at our Capital Markets Day. And I believe with our Damped acquisition, we’re off to an awesome begin, and this clearly matches the framework, which we shared again in March. After which, it additionally has an awesome alternative for future engaging development. After which lastly, at our March Capital Markets Day, we shared our purpose of attending to $10 billion of EBITDA normalized EBITDA in 2027, which assumed we’d deploy roughly the remaining 30% of our free money circulate that we have not returned to traders to fund our future M&A ambitions. However I need to be clear about a few issues. Our commitments to traders stay steadfast and our capital allocation rules and priorities stay unchanged. We shall be disciplined acquirers we is not going to burn it in your money. We is not going to construct a lazy stability sheet. If we won’t discover compelling transactions, we’ll give again extra of your money to you.

Operator: Our subsequent query comes from the road of David Begleiter with Deutsche Financial institution. Please proceed along with your query.

David Begleiter: Simply in IND, how a lot of the PO/TBA plant contributed in 2023? Do you suppose mid-cycle earnings energy right here continues to be with the brand new CBA plant above $2 billion. And when do you suppose you will begin attaining a run ranking at that mid-cycle earnings degree? Thanks.

Peter Vanacker: Joyful birthday, Dave. We heard that you’ve got your birthday right now. Good query. If I take 1 step again on the I&D enterprise in This autumn, perhaps a few numbers and stick with me so $265 million, excluding recognized objects is the EBITDA that we generated in This autumn. However one must think about, after all, that we had a heavy LIFO influence of $95 million. So if I add the LIFO influence of $95 million, then exit the underlying outcomes have been $360 million for This autumn evaluating to This autumn 2022 which was $291 million. So a fairly underlying efficiency, good quarter in IND and I didn’t even think about the truth that we had scheduled turnarounds bottleneck in addition to in Bayport. So we alluded to that, in our steering on the time once we launched the Q3 outcomes of an influence of about $120 million. So we laying fairly a very good quarter in IND. And naturally, a part of that was additionally attributable to the truth that we very efficiently began up our PO/TBA plant. The brand new PO/TBA plant, we alluded to mid-cycle margins, $450 million. We mentioned final yr in yr one. So meaning 2023. We might run at a minimal of fifty% nameplate capability. We overachieved that concentrate on. We ran at roughly slightly bit greater than 60%, I might say. After which, additionally once we take a look at this yr, we are going to proceed to ramp up, and we are going to do it in a really disciplined manner, reflecting on market demand for propylene oxide and oxyfuels. However one might even see additional progress, I might say, in all probability going to 70%, perhaps exceeding 70% capability utilization. After which once we transfer into 2025, that is the place one would see the complete good thing about the PO/TBA plant when it comes to capability utilization.

Operator: Our subsequent query comes from the road of Vincent Andrews with Morgan Stanley. Please proceed along with your query.

Vincent Andrews: Simply on the worth enhancement program. I am simply attempting to know the influence to ’23 and ’24, a bit higher. If we simply kind of sort of take a look at a ratio of kind of what that 2017 to 2019 EBITDA was at Lyondell then versus what it was in 2023. If we apply that ratio to the VEP numbers, would that be about proper when it comes to what you loved from it in ’23 and what you count on in ’24?

Michael McMurray: Sure. What I might say, I imply, hopefully, you heard my ready remarks, Vincent, so the profit, the precise profit in our P&L for 2023 was roughly $300 million. After which we guided for ’24 for an exit run charge of $600 million. Now when you’re attempting to attract a line from ’23 to ’25, it seems like that sort of the tempo of change slows a bit. However take into account that final yr, we centered on low-hanging fruit, issues that did not require funding and that we might execute upon in a short time. So we’re in sort of build up initiatives once more as we sit on this yr, however we now have excessive confidence within the outlook that we gave as much as $1 billion in 2025 and once more, $300 million of P&L profit in ’23, precise.

Operator: Our subsequent query comes from the road of Michael Sison with Wells Fargo. Please proceed along with your query.

Michael Sison: Cheers, when it comes to 2024 loads of chemical firms you have reported so far has kind of mentioned their earnings might get better or be higher in ’24 versus ’23. It appears like your first half goes to be slightly bit challenged with demand being weaker and the second half being slightly bit higher. So once you kind of complete up probably what you see in ’24, ought to earnings be up, flat or down or simply perhaps directionally for the complete yr, how do you consider the setup for early?

Peter Vanacker: Effectively, Michael, you mentioned it your self. I imply, Q1, nonetheless modest Q2 seasonal calls for have been selecting up. After which what I mentioned in the beginning additionally second half of the yr, we count on no less than, that we are going to see rates of interest taking place demand for sturdy items, I imply going up, some restoration in Europe, some restoration in China. In order a consequence, when you added all that, one would count on that earnings are going to be higher than final yr.

Michael McMurray: However principally within the second half.

Operator: Our subsequent query comes from the road of Arun Viswanathan with RBC Capital Markets. I am sorry. We’ll go on to our subsequent query, comes from the road of Kevin McCarthy with Vertical Analysis Companions. Please proceed along with your query.

Kevin McCarthy: In 2024, would you count on your regional mixture of earnings to vary materially from 2023. A part of the rationale I ask is it seems such as you’re guiding to a tax charge of 20% and infrequently regional combine is the rationale behind that, however maybe there are different causes you may name out. Perhaps you possibly can simply sort of discuss via the dynamics there could be useful.

Michael McMurray: Sure. I am comfortable to speak via it. So sure, I imply, the ETR, we guided to of 20% is up roughly 1 share level versus what was in 2023. So not an enormous story. There’s a number of give and takes. Now we did information our money tax charge to be up a few share factors versus final yr and in addition our ETR from 2023 and that is largely pushed by a lower in U.S. tax depreciation and in addition the achieve on the sale of our EO&D enterprise. Hopefully, that is useful.

Operator: Our subsequent query comes from the road of John Roberts with Mizuho. Please proceed along with your query.

John Roberts: May we get an replace in your China operations each in PO styrene and your polyolefins JVs?

Peter Vanacker: Sure, John. Welcome again. Let me give that query to Ken. The chance?

Ken Lane: Sure, certain. I am going to take a query for O&P after which perhaps Kim, you’ll be able to touch upon IND. However for O&P, we proceed to function the three way partnership at technical minimums. The main target actually is on discovering higher product combine and buyer combine in area. Our focus once we entered that three way partnership was to construct out an elevated presence within the home market as a result of we do market the high-density polyethylene and polypropylene from the asset. The crew did an awesome job with that final yr. So earnings, after all, are nonetheless very challenged in China. Should you take a look at common margins, they’re nonetheless barely destructive which we’re seeing that in our asset. Even with a brand new world-scale asset, it nonetheless is a really difficult market, and we count on to begin to see some enchancment in that within the second half of the yr. However thus far, demand has been, I might say, modestly enhancing, however have not seen actually an enchancment in margins but, Kim?

Kim Foley: I might say because it pertains to the joint ventures we now have on the propylene oxide information. We ran each of these JVs above 95% working charges final yr, excluding a turnaround, which was considerably greater than different PO vegetation in that area. As Ken alluded to, the margins have been relatively skinny. We noticed excessive uncooked materials prices, and we additionally noticed excessive utilities. However as we have talked about earlier than, these are the very best applied sciences that we now have within the area. They’re very price aggressive. They sit on built-in websites owned by an excellent operator with experience in each of those applied sciences. And we expect as we go ahead, we now have big potential right here.

Peter Vanacker: And will I add to that additionally, you in all probability observed some information circulate round China, phasing out chlorine-based propylene oxide applied sciences in direction of 2025. Nearly all of propylene oxide capability in China that might be phased out for time which additionally matches for us very effectively along with our international technique, the profitable start-up of our PO/TBA plant. And we’re operating this enterprise efficiently underneath Kevin’s management from a worldwide foundation.

Operator: Our subsequent query comes from the road of Mike Leithead with Barclays. Please proceed along with your query.

Mike Leithead: I needed so as to add round O&P EAI, EBITDA has been under breakeven, I believe 4 out of the final 6 quarters. And I admire demand is not nice throughout most markets. Nevertheless it simply looks as if there’s been a little bit of a shift right here versus the profitability up to now decade. So do we have to take a much bigger restructuring overhaul to make this enterprise worthwhile once more? Do we have to anticipate the world to get higher? I imply simply how are you approaching that enterprise right here in ’24?

Peter Vanacker: Sure. Thanks, Mike. An excellent query. And you have seen from our actions already final yr that we’re turning round each stone. We did shut down one line in Brindisi, which is a crucial capability. We have seen that there was a few different bulletins within the market when it comes to consolidations. We proceed to look, after all, on the complete portfolio. That is what you’d count on us to do. However having mentioned that, I additionally mirror again on This autumn. So in an enormous image on for the corporate for us, was in direction of the top of the yr, we needed to additionally optimize our money circulate and dealing capital. And we freed up about $700 million in working capital in that This autumn. And as a consequence, after all, can also see this enterprise in direction of decrease than what we had initially guided to. 75% of capability utilization was the steering. We lowered at actually surprisingly low ranges 65% of our capability utilization. Once more, within the context of additionally with the present market surroundings, optimizing our working capital. Something you need to add?

Ken Lane: No, that is it. I imply that simply impacted the P&L with the absorption of the fastened prices that go together with that. However we pulled exhausting on the working capital lever, and we’ll proceed to remain centered on maximizing money circulate. Difficult surroundings.

Peter Vanacker: Sure. And we see the longer term additionally in Europe. You see additionally that regulation is progressing when it comes to renewable and round options which is definitely additionally what we’re focusing upon, I imply, with various actions when it comes to constructing [indiscernible], the ultimate funding resolution for our MoReTec-1 facility, however a number of joint ventures and feedstock cooperations that we now have constructed up within the meantime. In order that in Europe, I proceed to consider that these round and renewable options, they demand, native provide chains. So subsequently, it will likely be essential to have such a number one place in a neighborhood market with the entry to model house owners or EPS enterprise, entry to OEMs as effectively.

Operator: Our subsequent query comes from the road of John McNulty with BMO Capital Markets. Please proceed along with your query.

John McNulty: Only a follow-up on the NATPET three way partnership. I suppose, are you able to assist us to know when it comes to the power to upscale that with the extra allocation, is it comparable in scale or measurement, wouldn’t it be sort of the 400 KTA? And in addition, when you consider the timing of economic funding resolution and in addition how the capital will get allotted? Is it going to be proportional is similar sort of 35%, 65% or is there some totally different variation to that? Are you able to assist us to consider these?

Peter Vanacker: Sure, the present capability, as you rightfully mentioned, is round, 400KT so with the opposite that Ken referred to. We might have the ability to scale as much as in complete capability of 1 million tons. Once more, we now have 35% of the three way partnership. In order that 35% is legitimate for the present capability, however we can be legitimate for future capability if we take a ultimate funding resolution. Ken some extra info that you simply need to share?

Ken Lane: Sure, I am going to simply add that a part of the synergy that you simply had talked about earlier than is that area is wanting propylene. And so we’ll have extra propylene capability with this growth, which is likely one of the synergies round probably executing that. However it will likely be financed by the three way partnership. And sure, it will likely be proportionate for the shareholders, however we do not count on to be placing money in. That is going to be one thing financed by the three way partnership.

Operator: Our ultimate query this morning comes from the road of Matthew Blair with Tudor, Pickering, Holt. Please proceed along with your query.

Matthew Blair: Trying on the 70% payout goal versus free money circulate simply within the context of accelerating CapEx once you’re contemplating these payout targets, why is the denominator free money and no more of like a money from operations. Do not it’s essential stability these returns on the expansion investments in opposition to returning money to traders.

Michael McMurray: Undecided I absolutely perceive your query, however it’s fairly typical once you’re giving payout targets to offer it on the free money circulate line versus working money circulate.

Peter Vanacker: After which we additionally, on the Capital Markets Day guided to phrases, that what’s the CapEx degree that we’re investing so sustainable CapEx round. I imply that $1.2 billion, $1.3 billion a yr. After which the expansion CapEx, we additionally mentioned we’ll be just about within the vary of our historic spending someplace between $2 billion and $3 billion on a yearly foundation relying on how these initiatives come. So I believe that helps you, to do the again of the unloved calculation, no matter money circulate quantity you are taking.

Operator: Thanks. Girls and gents, that concludes our time allowed for questions. I am going to flip the ground again to Mr. Vanacker for ultimate feedback.

Peter Vanacker: Okay. Thanks, once more, for all the wonderful questions. And naturally, I additionally need to thank our international crew for delivering excellent worth and maximizing money conversion throughout these difficult occasions. We look ahead to sharing extra updates over the approaching months with additional progress on our long-term technique. We want you all an awesome weekend and keep effectively, keep secure. Thanks.

Operator: Thanks. This concludes right now’s convention name. You could disconnect your traces presently. Thanks in your participation.

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