LyondellBasell (LYB) Q3 2025 Earnings Transcript

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DATE

Friday, Oct. 31, 2025, at 11:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Peter Vanacker
• Chief Financial Officer — Agustin Izquierdo
• Executive Vice President, Global Olefins and Polyolefins — Kimberly A. Foley
• Executive Vice President, Intermediates and Derivatives — Aaron Ledet
• Executive Vice President, Advanced Polymer Solutions — Torkel Rhenman
• Director of Investor Relations — David Kinney

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RISKS

• Third quarter results included $1.2 billion in net identified charges, primarily from asset write-downs in the Olefins and Polyolefins Europe, Asia, International, and Advanced Polymer Solutions segments, "related to the prolonged downturn in the European petrochemical and global automotive industries," according to management.
• Management expects near-term "demand to remain soft across key sectors and regions," according to Torkel Rhenman for Advanced Polymer Solutions, with pricing pressures offsetting some benefits of cost reductions.
• Guidance indicates lower profitability in the fourth quarter, driven by year-end seasonality and proactive operating rate reductions.
• Polyolefin margins in Europe remain under pressure due to "increased imports from the Middle East and North America," according to Kimberly A. Foley in the third quarter, amid weak fourth quarter demand.

TAKEAWAYS

• Cash Conversion -- Cash conversion reached 135% in the third quarter, significantly exceeding the long-term 80% target, with EBITDA to cash conversion (non-GAAP) reached 99% over the past twelve months.
• Cash From Operating Activities -- Operating cash generation was $983 million, an improvement of over two and a half times relative to the prior quarter.
• Shareholder Returns -- $443 million was returned via dividends, and total dividends plus repurchases reached $2 billion over the last twelve months.
• EBITDA -- Reported EBITDA was $835 million (non-GAAP); cash generation outpaced this non-GAAP EBITDA figure through working capital releases.
• Earnings Per Share (EPS) -- Earnings per share was $1.01, reflecting underlying business results excluding identified items.
• Segment EBITDA -- Olefins and Polyolefins Americas posted $428 million EBITDA (non-GAAP), up 35% sequentially, Europe/Asia/International earned $48 million in EBITDA. Intermediates and Derivatives generated $33 million in EBITDA. Advanced Polymer Solutions EBITDA was $47 million, and Technology EBITDA was $15 million.
• North American Polyethylene Demand -- Year-to-date North American demand rose 2.5% compared to 2024.
• European Polyethylene Demand -- Year-to-date through August, polyethylene volumes in Europe grew by approximately 3% relative to the same period last year.
• Fixed Cost Reduction -- Year-to-date fixed cost savings reached $150 million for the first nine months of 2025, with the company on track to exceed the $200 million 2025 target.
• Capital Expenditure (CapEx) -- Full-year 2026 CapEx guidance was reduced to $1.2 billion.
• Cash Balance -- Cash on hand increased to $1.8 billion by quarter-end.
• Asset Sales Milestone -- A sales and purchase agreement for select European assets was executed, with closing expected in 2026.
• Operating Rates -- Olefins and Polyolefins Americas operated at approximately 85% utilization (crackers at approximately 95%). The segment targets 80% utilization for the fourth quarter. Europe/Asia/International will target a 60% operating rate in Q4 2025 after idling OM6 in Wesseling for at least forty days.
• Working Capital -- Management targets $200 million in working capital reductions for 2025, with a significant further release (~$1 billion) forecast in Q4 2025.
• Dividend Policy -- CEO Peter Vanacker said, "we continue to take a balanced approach to capital allocation," highlighting a robust $3.4 billion cash balance at the start of 2025 and a proactive approach to preserve the investment-grade rating.
• Impairments and Tax Guidance -- A negative 13% effective tax rate for full-year 2025 was guided, primarily reflecting noncash impairments; management expects "cash tax rate is expected to be substantially lower than our prior guidance," according to Peter Vanacker
• Technology Segment -- Segment EBITDA (non-GAAP) declined to $15 million, with licensing activity down nearly two-thirds from its peak in 2018; Improvement is expected in Q4 2025 as previously sold licenses reach revenue milestones.
• Industry Rationalization -- Over 21 million tons of global ethylene capacity (approximately 10% of supply) expected to come offline from 2020–2028; Thirty percent of these closures were announced in just the past twelve months.
• Proactive Operation Reductions -- The company is idling assets in multiple segments to align with sluggish demand, including maintenance at the Wesseling and Channelview facilities and a turnaround of La Porte acetyls assets.
• Moritech One Facility -- Construction in Germany continues with major equipment deliveries and installation underway, targeting a successful ramp-up in 2027.

SUMMARY

LyondellBasell Industries N.V. (NYSE:LYB) highlighted a sharp improvement in cash flow and fixed cost reductions in Q3 2025, amid challenging global end markets. Executives emphasized portfolio optimization, including a pending sale of European assets and deferral of certain capital projects to conserve cash. Management detailed broad industry rationalization, with announced and expected closures removing significant global ethylene capacity—more than 21 million tons from 2020 through 2028, representing roughly 10% of global supply—potentially tempering new supply additions. The company disclosed a $1.2 billion impairment charge tied to regional and segment-specific demand weakness, materially affecting reported tax outcomes for the quarter. Strategic capital allocation was reaffirmed through a reduction in 2026 CapEx guidance to $1.2 billion and continued prioritization of shareholder returns, while maintaining an investment-grade balance sheet.

• Executives described a sequential recovery in select U.S. polyethylene markets, but noted that industry pricing power requires further supply-demand rebalancing and improved utilization rates.
• CEO Peter Vanacker said, "If you look at our joint venture, we're running at technical minimum capacity. You look at and we are in first quartile lowest cost in China. If you compare that to the others, why are they running, I mean, at minimum technical capacity and not shutting down? I think it continues to be mainly because of safeguarding employments," referencing widespread industry efforts to maintain operations for employment reasons amid unprofitable conditions.
• The company’s cash improvement plan is on schedule, targeting a total $1.1 billion benefit by the end of 2026 through working capital efficiencies, cost savings, and controlled investment spending.
• Management confirmed the dividend remains a capital allocation priority, supported by an elevated cash position and expanded debt covenants, even though free cash flow forecasts remain tight in current market conditions.
• The Technology segment expects some near-term improvement in Q4 2025 as earlier license sales reach recognition milestones, yet referenced the persistent, cyclical low in licensing activity.
• Europe and Asia face renewed margin pressures from import competition and excess capacity, prompting the company to idle major operating assets and implement additional production cuts into the fourth quarter.

INDUSTRY GLOSSARY

• Olefins and Polyolefins (O&P): Core petrochemical segments producing ethylene, propylene, polyethylene, and polypropylene.
• MTBE: Methyl tertiary-butyl ether, used as a gasoline oxygenate and octane enhancer.
• POSM: Propylene oxide/styrene monomer production units.
• Co-Product Contribution: Additional revenues or margin benefits derived from the sale of secondary chemicals produced in a process intended for primary outputs.
• Hyperzone PE: LyondellBasell proprietary polyethylene production technology for high-performance specialty grades.
• MORITECH (Moertek/Moritech): Company program and facilities for advanced chemical recycling/circular polymers.
• Anti-Involution Measures: Chinese government policies aimed at reducing structurally uncompetitive industrial capacity ("involution") in order to increase efficiency and profitability in key sectors.

Full Conference Call Transcript

David Kinney: Thank you, operator, and welcome everyone to today's call. Before we begin the discussion, I would like to point out that a slide presentation accompanies the call and is available on our website at investors.lyondellbasell.com. Today, we will be discussing our third quarter results while making reference to some forward-looking statements and non-GAAP financial measures. We believe the forward-looking statements are based upon reasonable assumptions and alternative measures are useful to investors. Nonetheless, the forward-looking statements are subject to significant risk and uncertainty.

We encourage you to learn more about factors that could lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are also available on our Investor Relations website. Comments made on this call will be in regard to our underlying business results using non-GAAP financial measures such as EBITDA and earnings per share excluding identified items. Additional documents on our investor website provide reconciliations of non-GAAP financial measures to GAAP financial measures together with other disclosures including the earnings release and our business results discussion.

A recording of this call will be available beginning at 1 PM Eastern Time today until December 1 by calling (877) 660-6853 in the United States and (201) 612-7415 outside the United States. The access code for both numbers is +1 374-6207. Joining today's call will be Peter Vanacker, LyondellBasell Industries N.V.'s Chief Executive Officer; our CFO, Agustin Izquierdo; Kimberly A. Foley, our Executive Vice President of Global Olefins and Polyolefins; Aaron Ledet, our EVP of Intermediates and Derivatives; and Torkel Rhenman, our EVP of Advanced Polymer Solutions. With that being said, I would now like to turn the call over to Peter.

Peter Vanacker: Thank you, David. And thank you all for joining today's call as we discuss our third quarter results. The LyondellBasell Industries N.V. team is making excellent progress on managing the cycle with meaningful progress from our cash improvement plan, which contributed to our very high cash conversion of 135% in the third quarter. We are well on our way to delivering on our $600 million target by year-end, and our actions are expected to increase cash flow by at least $1.1 billion by the end of 2026. Let us first take a moment to review LyondellBasell Industries N.V.'s safety performance with Slide number three. Safe operations are fundamental to our core values and essential for our future success.

This is demonstrated by our September year-to-date total recordable incident rate of 0.12, which is even better than last year's top decile results. Safety performance improved year on year, and this sustained trend is a direct reflection of the dedication and commitment of all our employees and contractors to operational excellence. Please turn to Slide four as we discuss our financial performance. During the third quarter, cash generation improved as LyondellBasell Industries N.V. continued to navigate the cycle. Earnings were $1.01 per share, with EBITDA of $835 million and $983 million of cash from operating activities. We returned $443 million to shareholders in the form of dividends. Turning to Slide five, let's discuss some encouraging trends developing in polyethylene markets.

In recent months, PE demand has started to improve following the multi-year post-COVID downturn. In both North America and Europe, 2025 domestic demand for polyethylene is the strongest we have seen since the start of the downturn in 2022. Despite the recent volatility in U.S. exports caused by shifting trade and tariff policies, third quarter year-to-date North American demand is up by 2.5% relative to 2024. After prolonged weakness following the onset of the Russia-Ukraine conflict, August year-to-date polyethylene volumes in Europe are up approximately 3% compared to the same period last year. Consumer packaging demand remains resilient, reflecting the essential role of polyolefins in everyday applications despite changing consumer behavior.

At the same time, investments in durable goods to support trends in energy digitalization and infrastructure are also driving demand growth. Renewable energy and data center construction require durable high-performance polymers for wire and cable jacketing, conduits, and water piping. Electric vehicles use approximately 10% more plastic by weight than vehicles powered by internal combustion engines. LyondellBasell Industries N.V.'s broad portfolio of innovative polymers positions us well to meet the stringent performance and sustainability benchmarks required to address these attractive and growing market opportunities. Let me be clear, these are not yet green shoots for our financial results. Markets will need to absorb new capacity, and operating rates will need further improvement before suppliers develop meaningful pricing power.

But these inflections in demand trends are encouraging and could be the early indicators of a market recovery. With this in mind, let's turn to Slide six and take a longer view on demand growth for polyethylene and polypropylene. As shown in the top chart, global polyethylene demand has consistently grown at a GDP plus rate of over 3% for at least thirty-five years. Unlike other markets like automobiles or housing, polyethylene markets have exhibited consistent growth. Even after recessionary downturns and pandemic-related spikes, polyethylene demand quickly returns to its long-term trajectory. This reflects the power of the underlying trends driving global consumption: population growth, urbanization, and a rising middle class.

Some observers question whether the flatter growth rates seen in 2022 and 2023 after the 2021 spike were reflective of a secular change. But as you can see in 2025, we are reverting to long-term global historic growth rates of over 3%. Most consultants are predicting continued growth through at least 2035 with some shifts in share of production from fossil-based feeds towards circular feedstocks. Looking at the bottom chart, mature markets such as North America and Europe lead in per capita consumption aligned with established demand patterns. Meanwhile, emerging regions such as India and Africa provide significant long-term growth opportunities as living standards improve in these regions.

China continues to demonstrate strong volume growth supported by its extensive manufacturing base and industrial activity. In contrast, South America reflects comparatively lower consumption, which can be attributed to a smaller manufacturing footprint and lower industrial intensity relative to other regions. These trends reinforce the importance of regional dynamics shaping the growth of polyolefins in the global market. While mature markets remain critical for stability, demand growth within these regions will be increasingly driven by infrastructure developments, electrification, EV mobility, home care, and pharma. While emerging economies will drive meaningful volume growth. Importantly, this demand growth is not negatively impacted by circularity. In fact, we are seeing growth shifting towards innovation, efficiency, and circularity in these markets.

LyondellBasell Industries N.V. continues to lead in sustainable solutions by investing in innovative feedstock sourcing, positioning us to capture value across diverse markets as we advance our strategy. On Slide seven, let's shift to the supply side and discuss how capacity rationalization trends are accelerating and reshaping the global ethylene supply landscape. As seen on the chart to the left, announced and anticipated closures and idling from 2020 through 2028 add up to more than 21 million tons of ethylene capacity, representing roughly 10% of global supply. Asia is leading the way with recent government announcements highlighting the magnitude of this trend. South Korea is targeting closures of up to 25%, while Japan recently announced closures of 1.5 million tons.

China is also a critical driver for global rationalization. With high costs for feedstocks, much of the Chinese petrochemical industry is on the wrong end of the cost curve. China's anti-involution measures are focused on reducing uncompetitive capacity, and approvals for new facilities are facing increased scrutiny. In Europe, regulatory burdens, persistently high operating costs, and weak margins are driving massive reductions in petrochemical capacity. Announced rationalizations total approximately 20% of regional capacity, and we expect more announcements will follow. The domino effect of these rationalizations is leading to an acceleration. Smaller petrochemical clusters are finding that the economics for cogeneration or industrial gas partners no longer work when a few assets are shuttered in smaller industrial parks.

About 30% of all global closures have been announced in just the past twelve months, underscoring the speed and magnitude of this shift. We are confident that these closures will help to partially offset the overhang from the substantial capacity additions underway in China. At LyondellBasell Industries N.V., we are leveraging the market trends that reinforce our strategy. We are growing our presence in cost-advantaged regions, upgrading our challenged positions, and leveraging our technology to ensure a strong presence in attractive markets. We are also cultivating deep partnerships with governments and regulators to ensure a fair trade environment and working towards smart policies, especially in Europe, that will provide critical support for our industry.

Now with that, I will turn it over to Agustin to discuss capital allocation and the progress on our cash improvement plan.

Agustin Izquierdo: Thank you, Peter, and good morning, everyone. Let me begin with Slide eight and review the details of our third quarter capital allocation. As Peter mentioned, we generated $983 million of cash from operating activities, an improvement of over two and a half times relative to the prior quarter. During the quarter, we returned $443 million through dividends while funding $406 million of capital investment. Our team remains focused and committed to balanced and disciplined capital allocation as we navigate the cycle. Our investment-grade balance sheet remains our priority while we invest in safe and reliable operations and work to preserve shareholder returns. We continue to advance our strategic initiatives to build a stronger and more resilient LyondellBasell Industries N.V.

Today, we are announcing a further reduction in our 2026 capital expenditures to $1.2 billion. We will continue to work to complete our Moertek One chemical recycling facility in Germany as we work to optimize our 2026 spending on maintenance. We are continuing to make good progress on the value enhancement program, which remains on track to exceed our target for 2025. Similarly, our cash improvement plan is on track to deliver our $600 million target of incremental cash flow. Year to date, we have achieved $150 million in fixed cost reductions. I will review the progress on our cash improvement plan in more depth on the next slide.

We are taking clear actions to ensure that we can continue to successfully navigate the cycle, with a commitment to our investment-grade credit rating as the foundation of our disciplined capital allocation framework.

Peter Vanacker: Please turn to Slide nine and let's continue by reviewing the progress on our 2025 cash improvement plan. For this year, we are targeting $600 million of improvements through a combination of working capital, fixed cost, and CapEx reductions as part of our total commitment to deliver $1.1 billion of improvement by the end of next year. We are making progress on working capital reductions through our traditional levers of managing inventories and payables. With this in mind, we are on track to meet our target of realizing approximately $200 million of working capital reductions. As you all know, LyondellBasell Industries N.V. has historically led the industry with a low-cost operating model.

Nevertheless, we have identified further opportunities to streamline our operations and are on track to exceed our $200 million fixed cost reduction target by the end of 2025, with year-to-date fixed cost reductions at approximately $150 million relative to our 2025 plan. And from a CapEx reduction standpoint, we are making progress to reduce spending on an accrued basis. But these reductions are impacted by timing of payments with cash realization currently trailing. We continue to prioritize safe and reliable operations while making progress on MORTIC One and delaying construction of FLEX Two and MORTECH Two until we see market conditions improve.

Together with working capital and fixed cost initiatives, these actions position us to deliver on our target to achieve $600 million of incremental cash flow in 2025. Now please turn to slide 10 as we outline our cash generation. Over the past year, LyondellBasell Industries N.V. generated $2.7 billion of cash from operating activities. Our team converted EBITDA into cash at a rate of 99% over the past twelve months and 135% during the third quarter, well above our long-term target of 80%. In the third quarter, we were able to maintain robust shareholder returns with dividends and share repurchases totaling $2 billion over the last twelve months.

Our cash balance increased during the third quarter to end at $1.8 billion. We will continue to take proactive steps to protect our investment-grade balance sheet as we navigate the cycle.

Peter Vanacker: Now let's turn to slide 11 and I'll provide a brief overview of our segment results. Our business portfolio generated $135 million of EBITDA during the third quarter. Profitability in Olefins and Polyolefins Americas improved with lower cost of ethylene due to co-product contributions coupled with less downtime following the successful completion of turnarounds at our Channelview complex in the second quarter. In intermediates and derivatives, improvements in Oxyfuel margins were partially offset by planned maintenance at our La Porte, Texas acetyls facility and the normalization of unusually high second quarter styrene margins. In technology, subunit licensing activity impacted third quarter profitability. All segments benefited from our progress on fixed cost reductions.

Third quarter results included identified items of $1.2 billion net of tax primarily associated with asset write-downs in our OMP EAI and Advanced Polymer Solutions segments related to the prolonged downturn in the European petrochemical and global automotive industries. We have also updated the guidance for our 2025 full-year effective tax rate to negative 13% primarily due to these noncash impairments recognized during the third quarter. In addition, our cash tax rate is expected to be substantially lower than our prior guidance. Please refer to our updated 2025 modeling guidance in the appendix to the slide deck describing impacts from plant maintenance and other useful financial metrics. With that, I will turn the call over to Kimberly A. Foley.

Kimberly A. Foley: Let's begin the segment discussions on Slide 12 with the performance of the Olefins and Polyolefins Americas segment. During the third quarter, O and P Americas EBITDA was $428 million, an improvement of 35% quarter on quarter. Seasonally higher demand and increased utilization following our Channelview turnarounds supported sequential growth. Our third quarter operating rates for the segment were approximately 85% with our crackers running at approximately 95%. During the third quarter, North American olefins industry operating rates remained high, driven by favorable margins and good demand. Although industry margins declined, LyondellBasell Industries N.V. integrated polyethylene margins improved by approximately 23% quarter over quarter, supported by the restart of the Channelview assets.

During 2025, operations of our Hyperzone polyethylene plant in La Porte have significantly improved with more uptime, higher rates, and increased on-spec production of the full range of premium products. We will perform some modifications at the plant in early 2026 that should allow our Hyperzone PE technology to reliably deliver high-quality, premium products with performance advantages that our customers desire. This is part of our portfolio transformation towards more specialized applications. In the fourth quarter, we expect typical seasonal trends of softer demand. Customers' desire to minimize year-end inventories will pressure sales volumes. Nonetheless, producers are also seeking to minimize inventories, and reductions in the industry operating rate are providing evidence of adjustments to market conditions.

The balance of supply and demand will ultimately determine the success of our price increase initiatives. Sequentially higher natural gas and ethane prices are likely to result in somewhat higher costs during the fourth quarter, but we expect that this will be partially offset by our fixed cost reduction initiatives. Despite volatile oil prices, the favorable oil-to-gas ratio continues to provide an advantage to North American ethylene producers relative to oil-based production in other parts of the world. We remain focused on aligning our operating rates to manage working capital while serving domestic and export market demand. We expect to reduce our operating rates by 5% and are targeting 80% utilization across the segment during the fourth quarter.

Please turn to Slide as we review the results of the Olefins and Polyolefins Europe, Asia, and International segment. During the third quarter, this segment generated EBITDA of $48 million. Altogether, EBITDA for both O and P segments improved by 31%. In EAI, segment EBITDA remained relatively flat as operational improvements helped offset margin pressures in Polymers due to weak demand. Despite fewer operational constraints on some of our own assets, polymer margins declined due to increased competition from imports originating in cost-advantaged regions such as North America and The Middle East. We continue to advance our strategic objectives in the regions as we progress on the proposed sale of the select European assets.

As part of this transaction, I am proud to share that we have achieved a major milestone with the signing of the sales and purchase agreement. This marks another step towards closing the transaction, which we expect to occur in 2026. The transaction is another example of our strategy to grow and upgrade the core through optimizing our portfolio for long-term value creation. Additionally, as part of the second strategic pillar to build a profitable CLCS business, we are making good progress on the construction of our Moritech One facility in Wesseling, Germany. Major equipment deliveries are underway, and structural steel is being installed to position us for a successful ramp-up in 2027.

Looking ahead to the fourth quarter, we expect similar seasonal softness in Europe. Rising feedstock costs are expected to add further pressure on margins. In response, we are taking steps to significantly reduce fourth-quarter production. We intend to idle the larger of the two crackers in Wesseling, Germany, OM six, for at least forty days during November and December. As such, we are targeting an operating rate of approximately 60% across the segment during the fourth quarter. With that, I will turn the call over to Aaron Ledet.

Aaron Ledet: Thank you, Kimberly. Please turn to Slide 14 as we look at the Intermediates and Derivatives. In the third quarter, segment EBITDA sequentially increased to $33 million as improved margins for oxyfuels were partially offset by planned maintenance downtime at our La Porte Acetyl's assets. Oxyfuel's margins were supported by planned and unplanned outages that reduced the supply of high-octane gasoline blendstocks in the Atlantic Basin. Our Bayport facility had a three-week unplanned outage related to a third-party supplier impacting EBITDA by approximately $15 million. While other notable outages included competitors along the Gulf Coast and in Western Africa.

As a result of our downtime, LyondellBasell Industries N.V. operating rates across the segment fell five percentage points short of our goal of 80% rates for the third quarter. Styrene margins normalized following the quarter supply disruptions across the industry. In September, we began a planned turnaround of our acetyls assets that will continue into the fourth quarter. The turnaround will support the first steps of our catalyst conversion initiative, aimed at improving margins and productivity while reducing our reliance on costly precious metals. As we navigate the cycle, our focus on operational excellence continues to deliver results.

In addition to executing on the La Porte turnaround, we recently achieved a milestone with our Channelview POTBA facility exceeding benchmark production rates during the quarter, reflecting focused execution and reliability across the site. Moving into the fourth quarter, we expect Oxyfuel's margins to moderate as typical year-end trends take hold in both gasoline and butane prices, although perhaps not as pronounced as in previous years. As part of our work to manage inventories, we will idle one of our POSM Units in Channelview in November for approximately forty days. With this additional downtime, we expect to operate our I and D assets at a weighted average rate of approximately 75% during the fourth quarter.

With that, I will turn the call over to Torkel Rhenman.

Torkel Rhenman: Thank you, Aaron. Please turn to Slide 15 as we review results for the Advanced Polymer Solutions segment. Third quarter EBITDA was $47 million as our cost discipline supported margin improvement to overcome headwinds in automotive markets. Global automotive production volumes declined as OEMs experienced typical downtime in the third quarter, and our volumes slightly declined due to lower demand from customers in the construction and electronics industries. EBITDA for the first nine months of 2025 exceeded full-year results for 2023 or 2024, clearly demonstrating the excellent progress the APS team is making to transform the business despite the challenging market environment. Looking ahead, we expect near-term demand to remain soft across key sectors and regions.

Pricing pressures are partially offsetting the benefits of fixed cost reductions achieved through our cash improvement plan. Despite the challenging market backdrop, we remain laser-focused in our work to transform the APS business. With a 75% improvement in our Net Promoter Score with customers since 2023 and having been recognized with supplier excellence awards by customers like Toyota, Nissan, and Stellantis amongst others, we continue to increase our growth funnel and improve our win rates to gain new project qualifications. We are proactively managing the business portfolio and remain confident that the work we are doing will profitably transform the APS business and enable us to achieve our long-term goals. With that, I will return the call to Peter.

Peter Vanacker: Thank you, Torkel. Please turn to Slide 16 and I will discuss the results for the technology segment on behalf of Jim Seward. Third quarter EBITDA of $15 million was lower than the guidance we provided during our second quarter call. Licensing profitability decreased as revenues declined and market dynamics remained challenging with very low licensing activity and lower catalyst volumes. We see licensing activity has dropped nearly two-thirds since its cyclical peak in 2018, with current levels comparable to the lows seen in the early 2000s, underscoring this significant slowdown of investments in global petrochemical capacity. In contrast, margins for our catalyst increased on sales mix improvements.

In the fourth quarter, we expect improved profitability as previously sold licenses achieve revenue milestones. Additionally, Catalyst demand is expected to improve from the unusually low levels seen in the third quarter. As a result, we estimate that the fourth quarter Technologies segment results will be similar to the first quarter results. Let me share our views on our key regional and product markets on Slide 17. In line with earlier comments, we expect typical year-end seasonality and our actions to proactively reduce operating rates will create headwinds across most businesses resulting in lower fourth-quarter profitability. In The Americas, exports will continue to play a critical role in balancing markets.

Despite a small uptick in fourth-quarter ethane costs, the U.S. feedstock-based cost advantage is durable and will sustain regional competitiveness despite trade volatility. As global trade flows adjust, these structural advantages will continue to allow LyondellBasell Industries N.V. to capture opportunities from cost-advantaged U.S. production. Within Europe, fourth-quarter demand is particularly weak, and polyolefin pricing remains under pressure from increased imports from The Middle East and North America. Nonetheless, circularity initiatives continue to benefit from supportive regional regulations, reinforcing consumer preferences for sustainable products in the region. In addition, accelerating capacity rationalizations will help to improve supply and demand balances across the industry. In Asia, near-term capacity additions will continue to pressure regional supply and demand dynamics.

That said, we remain cautiously optimistic as recent rationalization efforts in the region, as well as China's anti-involution measures, could provide partial offsets over the medium term. Within packaging markets, demand remains good even amid broader economic uncertainty as a shift towards value-driven consumption for packaged foods and other essential products sustains steady demand for our products. In building and construction markets, while lower interest rates are driving an increase in mortgage applications, affordability continues to constrain pent-up consumer demand for new and existing homes. In automotive markets, forecasts have become less pessimistic in the industry as recent trade agreements are providing greater clarity and reducing uncertainty across the sector.

Lastly, in oxyfuels, despite a strong October, the seasonal compression in gasoline crack spreads is expected to reduce profitability for the remainder of the year. However, we expect industry downtime will provide some modest support for margins relative to typical fourth-quarter trends. As we conclude today's call, I would like to acknowledge the resilience and discipline our team continues to demonstrate. Throughout the third quarter, we faced market headwinds, and we will undoubtedly face more challenges before the year is done. But our team continues to make smart decisions while operating our assets safely and reliably to deliver on their commitments and provide value for customers.

We continue to navigate the cycle with discipline, agility, and a clear vision that will position LyondellBasell Industries N.V. to emerge stronger and deliver lasting value for all our stakeholders. I am proud to lead this dedicated team as we continue taking strategic actions to reshape LyondellBasell Industries N.V., create value, and position our company for sustainable success. Now with that, we are pleased to take your questions.

Operator: Thank you. Ladies and gentlemen, at this time, we'll begin the question and answer session. As a reminder, if you have a question, please press the star followed by the one on your touch-tone phone. If you would like to withdraw your question, please press. We do ask you to limit to one question. Thank you. First question comes from the line of Patrick David Cunningham with Citigroup. Please proceed with your question.

Patrick David Cunningham: Hi. Good morning. I guess you know, just on polyethylene, you know, we seem to sit in a position of pretty resilient demand. You have some confidence exiting into next year on this growth trajectory. But with $65 crude, you know, net capacity additions are more likely to, you know, accelerate versus this year before closures become meaningful. And then some trade flow uncertainty on top of that, how would you weight the likelihood of any sort of inflection point in, you know, supply and demand or underlying prices and margins into next year?

Peter Vanacker: Thank you, Patrick. Let me make a couple of comments on your question, and then I will hand over to Kimberly A. Foley. Rightfully so, yes, as we've shown in the presentation, you see that spike of additional capacity coming on stream in China during the next couple of years. But as we have also shown, about 21 million tons of ethylene capacity is about to disappear as well. That's our estimation. Of course, not all of that has been really communicated and decided yet. But we believe that will be a good balancing out of the overcapacity.

Please remind, I mean, that a lot of that capacity in China is at the wrong side of the cash cost curve, as we said in the prepared remarks. So they will have continuously difficulties to compete as well. And therefore, if margins remain low, then they would run at minimum technical capacity. So one may not, and I've said that before, look at nameplate capacities only. One needs to look at economically feasible capacity based upon current market conditions. We continue to see that polyethylene globally is very robust in terms of demand. That, of course, has to do with the different applications that it goes in. Consumer packaging continues to be very robust.

What we have seen also in the past during critical periods in time, like for example, a pandemic, we also see that there is more and more support by having lower inflation rates, lower interest rates, that, of course, we would expect will lead to more demand in durable goods. One may expect during the next couple of years that then the housing markets would be more positive than what we have experienced in 2025. The last thing that I want to point out is that government spending on infrastructure is one element that is driving demand.

Tech artificial intelligence, data centers, utility construction for power, EV cars, and that's they all demand, I mean, that these are all applications increase demand, just for polyethylene, but also for polypropylene. Kimberly, anything you want to add?

Kimberly A. Foley: I think the only thing that I would add to all those comments, Peter, as it relates to LyondellBasell Industries N.V., and our ability up for an inflection point in 2026 is gonna be there's been new capacity, derivative capacity brought online this year by one of our competitors, and there's another proposed set of assets coming online next year. So you're gonna see a tightening in the ethylene market. And that's gonna likely improve chain margins as we think about 2026.

Peter Vanacker: And with regards, I mean, to the oil-gas ratio, I mean, we continue to believe that the high oil-gas ratio is sustainable. Yeah. We've seen oil-gas ratios in the range of 15 to 25. Would actually have to go down to, let's say, around six or seven, for the productions in the Gulf Coast to, let's say, have a flattening cost curve. And we don't see that happening. We don't see that happening. We're more looking at something in a range of 12 to 15 in the immediate foreseeable future.

Operator: Thank you. Next question comes from the line of David L. Begleiter.

David L. Begleiter: Thank you. Good morning. Peter, in China, can you just go to what happened there? You have a unique perspective given your JV. So how, why, and how are these plans still running? Is it cheap Russian crude? Is it government support? Are they not allowed to close? Maybe you could relate that to your own experience with the with the poor JV. Thank you.

Peter Vanacker: Thank you, David. That allows me, I mean, then also that question to again highlight what I said at the prepared remarks. I mean, you said it rightfully. We have unique access to the Chinese markets. Also, due to our licensing activities. And the licensing activities, they have dropped about 80% from its peak in 2019.

So that's really what you see, I mean, that slowdown, that cyclicality because of course, on one hand side there is no profitability, in China, on the other hand side, you hear more and more in the next five-year plan discussions locally going on around Italy and related projects, the burden, mean, to get the approval central NDRC is much higher than eventually it has been by local NDRCs in the past. If you look at our joint venture, we're running at technical minimum capacity. You look at and we are in first quartile lowest cost in China. If you compare that to the others, why are they running, I mean, at minimum technical capacity and not shutting down?

I think it continues to be mainly because of safeguarding employments. But everybody knows and everybody talks about the anti-involution measures. And even if it's still early and we don't have the full visibility, you saw the chart in our presentation. We do expect and hear that on the grounds that there will be quite some closures that will flow out of that anti-involution. So our level of confidence from quarter to quarter is increasing that there will be capacity shutdowns in China.

Kimberly A. Foley: I think the only thing that I would add is just this week we announced at our JV that we have added ethane to the feed slate. So we're looking to improve our cost position even more.

Operator: Thank you. Our next question comes from the line of Matthew Blair with Tudor, Pickering, Holt. Question.

Matthew Blair: Great. Thank you and good morning. So you talk a little bit about the security of the dividend. I think the current yield is up to 12%. And despite the strong cash conversion, your free cash flow appears pretty unlikely to cover the dividend. So how are you thinking about this? And with the cash that you on the dividend, would that be better served? And areas like shoring up the balance sheet or you know, maintenance CapEx or things like that?

Peter Vanacker: Thank you, Matthew. And, of course, I mean, we were expecting that someone would ask that question. So thank you for asking the question. Let me highlight, I mean, four points. On our thoughts on our dividends. First of all, as you all know, we were very careful in how we were managing our cash during the last couple of years. And I know some people have asked us questions why are we keeping that cushion. Today, I'm happy that we did took those take those decisions in the past. So we started 2025 with a cash balance that provides us a cushion.

It's a robust cash balance of $3.4 billion, which has been much higher than the cash balance that we had in the past, which was more around $1.6 to $1.7 billion. That's the first point. Second point, we continue to take a balanced approach to capital allocation. Especially as we are navigating the cycle. We reminded you again, we are on track the cash improvement plan $1.1 billion at least until the 2026. The first tranche of $600 million until the 2025, we set well on track.

And we also communicated today when we looked them into more details on our CapEx for next year, that we could further reduce our CapEx from $1.4 billion to $1.2 billion again in 2026. The third point is our investment-grade balance sheets remains of course the foundation of our capital allocation strategy. You all know, I mean, that investment grades makes it cheaper to do business, avoids, I mean, having to make dramatic changes to our strategy or portfolio to address, I mean, the balance sheet and we continue to have very proactive dialogues with credit agencies. We're also fully aware of their expectations and the sensitivities. So also as part, you saw our navigating the cycle.

We proactively renegotiated the net debt to EBITDA covenants on our RCF in September from 3.5 multiple to 4.5 turns, and that through 2027. And that's of course also these are activities that build trust with the rating agencies. And the last point I want to make is safe and reliable operations, and sustaining CapEx remains a core priority for us. So we're not making we're not shortcutting we're not putting safety and reliability in geography. But as we have transformed already our portfolio, it means that also moving forward, we can do with less safe and reliability, so sustaining CapEx. And the last element is progressing, as we said, very well.

In that portfolio management and that is the exits of the four sites the sale that we have as said, with very good involvement of Equita in the entire process. They are very committed. So therefore, we continue to believe that we will be able to close in the 2026. And that, of course, will continue to free up CapEx for LyondellBasell Industries N.V. Thank you.

Operator: Our next question comes from the line of Jeffrey John Zekauskas with JPMorgan.

Jeffrey John Zekauskas: Thanks very much. Your CapEx number for next year that you project, $1.2 billion, is below your depreciation and amortization. Are there any growth projects that are left in the capital budget for next year? And if there are, which ones? And for Agustin, do you expect your accounts payable to be very different in the fourth quarter than they were in the third quarter?

Peter Vanacker: Thank you, Jeff, for your question. Let me take the first part and then I will hand over to Agustin to take the second part. If you remember well, I mean then we have been investing quite above, I mean, depreciation during the last at least four or five years. And that gives us opportunities because we are not fully leveraging upon those opportunities yet because of where the market today is. Let me remind you that we have our Hyperzone that was standing for $170 million per year improvements. We are ramping it up. We do some additional smaller investments in Hyperzone, so to make it very further reliable.

We do the investment in acetyls reliability and the debottlenecking, the new technology. Standing for a $75 million, all of that of course, mid-cycle margins. Our MRT1 continued to progress, which is standing for about $25 million plus per year in EBITDA, MRT2, we have progressed it up to a point where we set okay, we will see, I mean, how the market further develops. But we can activate it relatively quickly. If the market develops further and in addition to that if we also if it fits from a cash, I mean, perspective. POTBA, as you know, was standing for $450 million mid-cycle margin. We've worked, I mean, on capacity creep.

Which adds another $50 million on top of that $450 million. We've done productivity improvements in our POSM, $25 million. APS even if the market is very challenging, we continue to make very good progress. We have invested in Natpad. We're still working on the second phase. And remember, we've launched, I mean, about three years ago our value enhancement program. We're well on track to exceed, I mean, $1 billion exit run rate mid-cycle market margin target for the 2025. Of that, real contribution is about $700 million, so what we call in periods, is $700 million up to the end of this year.

So the delta between the $1.15 billion and the $700 million which is about $450 million is something we did not capture yet on one hand side because of future potential growth and on the other hand side because we are substantially below mid-cycle margins. So if you add it all up, I think we have some quite some impressive growth opportunities as the markets continue as the market returns back, let's say and we hope that will happen already in 2026, but definitely 2027, 2028 and beyond. So with that, Agustin, the second part of the question.

Agustin Izquierdo: Sure, Jeff. Thank you for the question. Happy to answer. I think it's just consistent with the remarks and comments on operating rates that we're expecting for Q4. It is also normal that our payables will be lower. Probably in the neighborhood forty fifty lower versus what you saw in Q3. But I would also highlight that we are expecting a working capital release in Q4 close to $1 billion. This is consistent also with the cash improvement plan with all the very good measures we're taking throughout the year and not dissimilar actually to what we did during 2024. So we know how to do this, and we will again be very focused on cash generation.

Operator: Thank you. Our next question comes from the line of John Roberts with Mizuho Securities. Please proceed with your question.

John Roberts: Thank you. When you sell or out-license technology, the customer's plant starts up several years later, and you noted the low activity currently. But have your catalyst sales kinda lag that? When do your catalyst sales peak? And more importantly, when is the drop-off then in the new start-ups of the companies that you've licensed out licensed to?

Peter Vanacker: Thank you, John. Very good detailed question. Mean, normally, the catalyst sale I wouldn't say it really peaks and then it drops down. It's more dependent on the run rates of the assets. So what you see today is assets that are buying over catalysts like for example in China, when they run minimum technical capacity, then of course the sales of catalysts are slower. Because you don't consume the catalyst as fast. But as if operating rates would go up, or, for example, if new investments and common stream then you would continue to see that our catalyst sale is going up.

We've done in the last couple of years, I didn't mention that, when answering the question of Jeff, but of course, during the last couple of years, we had done some investments on debottlenecking also on the catalyst side. To be prepared if the market picks up. Then we would be able, of course, also to then produce and sell those catalysts.

Operator: Thank you. Our next question comes from the line of Frank Joseph Mitsch with Fermium Research. Please proceed. Question.

Frank Joseph Mitsch: Thank you so much, and happy Halloween, everyone. Peter, a comment and a comment and a question. My comment or I guess to summarize your thoughtful response on the dividend is that yes, we will pay it in the near term if I am I interpreting correctly? And then secondly, from a high-level perspective, you know, looking at the fourth quarter, you outlined a $110 million sequential headwinds from turnarounds. You know, obviously, we'll layer in some seasonality that's typical in the fourth quarter. Are there any other material puts and takes that we should be aware of looking at the fourth quarter relative to the third quarter?

Peter Vanacker: Thank you, Frank, and thanks for wishing us a nice Halloween. Not gonna tell you if we are having a Halloween costumes here in our room. To your first question, again, as I said, on the four points, and what you see from our actions in navigating the cycle we have that very sharp focus on cash conversion. We have our cash improvement plan. We're proceeding very well in that. We have a strong balance sheet to start that we have started with and it continues to be in very good shape. I mean from our history, mean this is a fantastic team. That is really focused, I mean, on execution.

The team has shown in the past that we are excellent in execution, so from that perspective, that's what we are doing. I mean, control the controllables, focus on the execution, and make sure that we continue to make progress. So I don't know what else I mean that I should say, I mean to that. I'm very pleased. Yeah. When I see, I mean, how aligned everybody in the company is and how everybody is doing its best diligently by controlling the controllables. Your second question, Q4 outlook, you're right. I mean, we when we looked at the market environment and we had some work, I mean, that we wanted to do in Wesseling at OM6.

Some work that we have to do, I mean, in Matagorda, and then also looking at acetyls and POSM and IND, so we said, let's instead of take the opportunity now. Let's do it now in Q4. waiting until I don't know, maybe the 2026, so then we are ready and we don't have a lot of these downtimes with its respective impact on the bottom line for 2026. So that's a decision that we took and as said, you rightfully recalled, I mean, what that delta is compared to, I mean, to Q3. We have polyethylene prices price increases on the table. We, of course, continue to look at everything what is happening in the market.

I mean PE polyethylene has grown. Exports continue to be robust based upon low delivered cost positions that manufacturers, including ourselves, have in the Gulf Coast. So we will continue to, of course, push, I mean, for price increases we believe it is appropriate that polyethylene price prices go up. Too early to say if we will be successful, but it gets a lot of attention of course. Maybe I want to hand over also to Aaron to talk a little bit about MTBE raw material margins, seasonality to give a little bit more color on that because October was very strong in his area.

Aaron Ledet: Yeah. Thanks, Peter. I appreciate the opportunity to talk a little bit about MTB. So it has, to your point, been a really good start to the quarter. With premiums carrying over from September into October. As I mentioned in my plan remarks, much of the third quarter benefit was from both planned and unplanned outages. Not only in The US Gulf Coast, but in the Atlantic Basin. And as we've seen those premiums carry over into October, I just wanna remind everyone 20% of US Gulf Coast capacity remains offline. And should be back, in operation maybe second half. Of November.

So it's still, possible that we see positive premiums carry over into November, and what we would usually say is a seasonally low quarter for Oxyfuel's margins.

Peter Vanacker: Yep. And I mean have a look, mean also Europe, I mean diesel cracks are very strong, yes, with everything that is happening around Russia. Gasoline is performing better. I point you to Ara gasoline, inventories. They are materially lower than normally at that point in the cycle. And we're not done yet with our fixed cost reductions in our cash improvement plan. We've delivered very well in Q3. But of course, you will see more that is flowing in Q4 as well. So if I take everything together, yes, I mean there is an impact that we have from that those decisions on the increased downtime in Q4.

Very deliberate decisions due to turnarounds, due to maintenance work now instead of postponing it or doing it as normally we would probably say we would do it in 2026 somewhere.

Operator: Thank you. Our next question comes from the line of Matthew DeYoe with Bank of America. Please proceed with your question.

Matthew DeYoe: Yes. Thank you. This is Salvator Tiano filling in for Matt. I want to ask about the slide where you saw where you show Tara already happened and the projected ethylene capacity closures. And firstly, can't you men can you discuss how many of these have already happened in prior years before 2024? Because I believe the note says this goes back to 2020. And for both ethylene as well as polyethylene, can you talk about where operating rates are today? So, essentially, how important would the incremental closures be from today rather than just talk some the 2020 to twenty four period? Let me give you the first shot.

Peter Vanacker: Matt, thank you for your question. If I look at closures and the announcements that have been made so far, it's somewhere, let's say, the ballpark of 9.5 million tons of ethylene capacity. So there's still things that have been communicated, that have been talked about, that we would expect to see to come up with that 21 million tonnes. And again, on the 21 million tonnes especially also on regions where it's these assets are very competitive, like in Europe, for example, even if there is 20% of Italy in capacity that we expect to disappear based upon the announcements. We don't believe that we are at the end of all the announcement yet.

We still expect there will be more to come.

Kimberly A. Foley: Yeah. Think that the simple answer and the reason that we created this chart the way that we did is so that you know what is closed today so many people are announcing closures in the future. And then there's this anticipation. So I will also go back to some of the comments that Peter made in his prepared remarks. You know, you'll notice, for example, in China, we don't show any anticipated closures. Yet. We all are hearing comments every day about anti-involution and what that will be.

And whether you know, you believe the criteria about 300 KT plans in twenty years, for some of the new evolving criteria that is being discussed in China now you have the potential for another four to 8 million metric tons that comes out there. And then the last comment that I wanna reiterate is this domino effect. You know, a lot of these are ethylene cracker announcements. So now the feedstocks are coming out of these derivatives in industrial parks, and it leaves a lot of ambiguity around you know, what's the steam provider gonna do? What's the natural gas provider gonna do? Is this still gonna be an economic situation for all parties involved in the complex?

So I do believe there's dominoes that we will also see.

Peter Vanacker: And I wanna point out to your second question on operating rates. I mean, we need to differentiate. That's a key message that I had in one of the first questions. Because low-cost delivered assets are running at very high capacity. At this point in time. Because they are competitive. If you look at European capacities, if you look at Chinese capacities, then there I would say yeah, they are running at minimum technical capacity. So that may be 70%, 75%, Some of them minimum technical capacity, if they don't have the flexibility, is close to 80%.

But that's the scenario that you see unfolding during the entire year 2025, and that's what you would expect also in a market where supply and demand is not balanced. Is that the low-cost delivered capacities will continue to make good returns create good cash flow, and run at maximum capacity. Whereby the other ones are either forced them into consolidate, to idle, to shut down, or run at technical minimum capacity.

Operator: Thank you. Our final question this morning will come from the line of Vincent Stephen Andrews with Credit Morgan Stanley. Please proceed with your question. Question.

Vincent Stephen Andrews: Hi. This is Turner Henrichs on for Vincent. I'm wondering if you all can help provide thoughts on bridge to 2026 in I and D. Specifically, there are some items that we may need to level set for including a sizable US propylene oxide closure, potential headwind to octane cracks from a refinery in Nigeria, assuming the rates return to high levels. Reversal of this year's acetyls turnarounds for you all and US Gulf Coast competitor capacity coming back online in MTBE. It'd be great to hear some thoughts.

Aaron Ledet: So maybe I'll I'll point to a few different comments and we have reason for optimism. As we look to 2026. I'll start with PO rationalization to your point. 10% of global capacity has been announced to come offline in the last twelve months. And so on the primary regions that we serve, we're already seeing market share improvement, particularly in The US and in Europe. You spoke to acetyls. You know, that's an investment that we've been waiting to make really at this level since COVID. We've been pushing capital out and waiting to invest in the asset.

But the investment that we're making, we do expect it not only to show, in terms of improvement from reliability, but we'll also see additional capacity coming out of our acid unit next year. I already mentioned in my planned remarks from a POTBA capacity perspective, we've demonstrated that we can run beyond benchmark rates. A little less than 10% and we're and remember, that's CapEx free capacity. So I'd say, you know, that's combine all three of those and that's the reason why I look to 2026 and have some optimism.

Operator: Thank you. That concludes our question and answer session. I'll turn the floor back to Mr. Vanacker for any final comments.

Peter Vanacker: Thank you again for all your thoughts or questions. Let me make some final comments. Our sharp focus on cash conversion, our cash improvement plan, and our strong balance sheet is allowing us to successfully navigate through this prolonged downturn. And our execution track record clearly demonstrates our progress. We've captured some of the value from our past investments in the new POTBA facility, Hyperzone PE, the Netpay joint venture, and our value enhancement program. These investments will provide further upside as markets recover. In addition, with our ongoing investments in MareTech One, and our acetyls technology, LyondellBasell Industries N.V. is well-positioned to capture market growth and create additional durable long-term value for our shareholders.

Over the past three and a half years, we've actively managed our business portfolio and we are progressing well with the execution of our European strategic assessment. Upon completion, we will have established a much more focused industry-leading low-cost model. And we're finding some tailwinds for 2026 and 2027. Monetary policy is becoming more accommodative for the industrial economy. And LyondellBasell Industries N.V. is prepared after several years of heavy maintenance we expect next year we will have less downtime and our smaller footprint will require less sustaining capital to support our results over 2026 and 2027. We hope that you all have a great weekend and a great Halloween. Stay well and stay safe. Thank you.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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