The paragraph outlines the proceedings of a LyondellBasell teleconference, which includes a presentation by David Kinney, Head of Investor Relations. The teleconference will review business results, utilizing forward-looking statements and non-GAAP financial measures. The company highlights the potential risks and uncertainties associated with these statements and urges consultation of their regulatory filings for more details. Accompanying slides and reconciliations of non-GAAP to GAAP measures are available on their Investor Relations website. Additionally, a recording of the call will be accessible by phone until March 2nd, with provided access codes.

In the conference call, Peter Vanacker, CEO of LyondellBasell, and other executives discuss the company's fourth-quarter and full-year 2024 results, strategic initiatives, and market conditions. Vanacker highlights the company's impressive safety performance in 2024, achieving a total recordable injury rate of 0.13, the second lowest in its history. Several sites celebrated over 10 years without injuries, and the Advanced Polymer Solutions segment saw a 39% reduction in incident rates compared to 2023. This safety achievement underscores the company's commitment to safety and operational excellence.

The paragraph discusses LYB's financial performance and the challenges faced in the petrochemical industry during 2024. Despite difficult conditions, the company remained focused on value creation, cash generation, and delivering shareholder returns, achieving earnings of $6.40 per share and an EBITDA of $4.3 billion. LYB generated $3.8 billion in operating cash and returned $1.9 billion to shareholders. The downturn has significantly impacted industry margins, but LYB anticipates potential gains from a market recovery, particularly in its polypropylene and polyethylene businesses. Ultimately, LYB expects to leverage its strategic progress to potentially exceed historical performance levels amidst the challenging environment.

The paragraph discusses the challenges and strategic responses of LyondellBasell in the face of recent industry downturns and structural shifts. In 2023, full-year margins peaked at $560 per ton, highlighting available growth despite challenges like slower global growth, higher energy costs, and regulatory impacts. The company is addressing these by implementing strategic initiatives, focusing on high-value opportunities, and transforming assets like the Houston refinery. By 2025, these actions aim to enhance EBITDA margins and provide resilience in future cycles. Notably, by 2024, LyondellBasell has achieved approximately $1.3 billion in incremental EBITDA through its strategy, with key contributions from the start-up of a PO/TBA plant. The value enhancement program is also outperforming expectations.

In 2024, the VEP program achieved over $800 million in recurring annual EBITDA improvements, contributing $600 million to that year's EBITDA. The company divested its non-core EO&D business and reinvested proceeds to acquire a 35% stake in the cost-efficient polypropylene joint venture, NATPET. Despite challenges from decreased automotive production affecting the APS transformation, improved customer focus increased project approvals. The CLCS business is growing, and the company plans to exit refining. Capital allocation remains disciplined, prioritizing high-return projects and careful M&A, resulting in lower but strategic capital expenditures. Slide 7 updates on CLCS business growth.

The paragraph discusses the growth and strategy of the CLCS business, emphasizing its focus on leveraging existing infrastructure and competitive advantages in innovative technologies and expanding markets. Despite challenges in the chemical industry, CLCS has experienced significant growth, with a 65% increase in volumes in 2024 and attractive margins. The business aims for $1 billion in incremental EBITDA from 2 million tons of annual volumes by 2030. The demand for circular plastics remains strong, driven by consumer preferences, brand commitments, and European regulations mandating increased recycled content. However, the transition to circular plastics is slow due to infrastructure needs and supply constraints, leading some companies to revise their usage targets.

The paragraph discusses LYB's strategic response to the delayed demand growth for circular plastics due to capacity constraints. Despite scaling back 2030 forecasts, the long-term investment thesis remains strong, with expectations of supply shortages and favorable margins. LYB is progressing with their MoReTec chemical recycling facilities in Germany and plans for another in Houston. The evolving regulatory framework in Europe, including the new PPWR packaging regulation, is set to boost demand for circular plastics significantly. LYB is poised to capitalize on this opportunity with its proprietary MoReTec technology, suitable for producing polymers needed in contact-sensitive packaging, thanks to its advanced technologies and global network. The paragraph concludes with appreciation for CFO Michael McMurray.

Michael McMurray is retiring after five years at LyondellBasell, where he served as CFO and contributed significantly to the company's strategy and financial leadership. He expressed gratitude towards his colleagues and the Board, as well as the investment community. Peter Vanacker announced Agustin Izquierdo as the new CFO, effective March 1. Agustin, who joined LYB in 2022, has a strong background in finance and commercial roles from his time at BASF and Morgan Stanley, and is the first CFO to be promoted from within LYB.

In the paragraph, Agustin Izquierdo expresses gratitude for his new role and aims to build on Michael's work at LYB. Michael McMurray discusses the company's focus on strategic priorities, maintaining a strong balance sheet, and returning cash to shareholders through dividends and share repurchases. In 2024, LYB invested $1.8 billion in capital expenditures and made strategic acquisitions and divestments, ending the year with strong liquidity. LYB increased its dividend for the 14th consecutive year and plans to continue growing it. The company remains committed to returning 70% of free cash flow to shareholders over the long term.

The paragraph discusses the company's financial performance and strategic activities in 2024. The business generated $3.8 billion in cash from operations, maintaining $3.4 billion cash on hand and achieving a cash conversion rate of 90%. Inventory adjustments and tax deferrals also played a role in cash management. For 2025, refining activities will be classified as discontinued operations, impacting financial reporting. In Q4, the company recorded $689 million in EBITDA, affected by higher costs and lower demand, particularly in Europe. There were also $852 million in net identified items, primarily due to non-cash write-downs and costs related to exiting the refining business.

The paragraph discusses the company's financial adjustments and future capital expenditure plans. It notes impairments due to challenging market conditions affecting European and Asian assets, as well as the specialty powders business. A LIFO inventory valuation charge reduced the fourth quarter's pretax results by $23 million. The company plans to defer some growth investments due to the tough operating environment, with a projected capital expenditure of $1.9 billion for 2025, focusing on sustaining investments and high-return projects. The 2025 effective tax rate is expected to be 17%, with a higher cash tax rate due to deferred U.S. tax payments under disaster relief. Additional financial modeling information is provided in the appendix for further details.

In the fourth quarter, the company reported an EBITDA of $496 million, affected by lower integrated polyethylene margins due to increased ethane and natural gas prices. Despite this, strong export demand boosted polyethylene volumes, with olefins crackers operating at 98% capacity, resulting in $40 million from spot sales. Looking ahead, higher ethane and natural gas costs are anticipated in the first quarter, alongside seasonal volume improvements and export strength. Operations in the O&P-Americas division will run at about 80% capacity, factoring in planned maintenance and the impact of Winter Storm Enzo, which is expected to reduce EBITDA by $45 million. The company also announced a second investment in Cyclyx to enhance plastic recycling capacity by 2026. In Europe, markets remained weak due to high feedstock costs and lower seasonal demand.

In the fourth quarter, extended maintenance and unplanned downtime in France led to a $20 million EBITDA impact and a resulting loss of $146 million, operating at 55% asset capacity. For 2025, improved European demand is expected to boost volumes and margins, but constraints from a nearby German refinery will limit operations to 75% in the first quarter. Despite past challenges, the company completed a major turnaround in Wesseling, and continues strategic reviews and growth in the CLCS business, including the acquisition of APK. Construction of the MoReTec-1 recycling plant is progressing. The refining segment saw a $24 million EBITDA loss, with flat margins but improved refinery utilization following prior unplanned downtime.

In the paragraph, it is noted that refinery shutdowns, delayed slightly by Winter Storm Enzo, are set to be finished within the first quarter, aiming for a refinery utilization rate of 35%. The emphasis remains on safety as operations at the 107-year-old refinery are wound down. Aaron Ledet then discusses the Intermediates and Derivatives segment, reporting a fourth-quarter EBITDA of $250 million. Oxyfuel margins were typically low due to decreased crude oil prices and gasoline crack spreads. Despite weak durable goods demand, there was an improvement in PO and derivatives volume. The IND assets operated at 70% to align with low seasonal demand and achieved strategic milestones in 2024, including divesting the non-core ethylene oxide business and operating a PO/TBA asset above target rates. Future operations are expected to meet benchmark performance levels.

In the paragraph, the company highlights its strategic focus on exiting non-core businesses to concentrate on areas with market leadership potential and aligned with its long-term strategy. As the first quarter begins, they anticipate moderate demand improvements and plan to operate at 80% capacity, accounting for some downtime due to Winter Storm Enzo. Torkel Rhenman reports that the Advanced Polymer Solutions segment faced low automotive demand in the fourth quarter but expects improvement due to a customer-centric strategy. This approach led to a 20% increase in EBITDA and a 46% rise in the Net Promoter Score in 2024. The team achieved above-market growth in polypropylene compounds and Masterbatch businesses and set a new safety performance record.

The paragraph outlines LyondellBasell's recent performance and future outlook. The company has shown resilience in a challenging environment, with the technology business achieving a significant year-over-year increase in fourth-quarter EBITDA, despite seasonal moderation in catalyst volumes. However, a decline is anticipated for the first-quarter technology segment performance due to reduced licensing revenue. In the near term, demand is expected to see modest seasonal recovery, though supply in the Americas may be tight due to industry-wide maintenance. In Europe, rising energy costs will pose challenges, but inventory restocking and potential capacity rationalization could help balance the market.

The paragraph discusses gradual improvements in Asian markets, aided by China's stimulus efforts, while being cautious about their long-term impact. The packaging sector is expected to maintain steady demand, with U.S. infrastructure efforts boosting Building & Construction activity. Remodeling activity is predicted to rise in 2025, while the automotive sector faces challenges due to inventory levels and trade policy changes. Oxyfuels are set to benefit from stronger crude prices and improved gasoline crack spreads. The focus remains on operational reliability and cash generation. As LYB looks ahead to 2025, key markets show signs of recovery, supported by positive domestic demand, reduced interest rates, and moderating inflation. However, potential tariff impacts are a concern, but LYB is well-positioned due to favorable oil-to-gas price ratios.

The paragraph discusses LYB's ongoing portfolio transformation, highlighting key developments and strategic initiatives to enhance core businesses. Notable achievements include acquiring NATPET, divesting the EO&D business, reviewing European strategies, and exiting refining. In 2024, LYB has advanced its C&LCS business by building a MoReTec facility and enhancing technology investments. Recognized in the top 10% by EcoVadis and Sustainalytics for sustainability, LYB is leading in sustainable solutions. Their VEP is projected to generate $1 billion of recurring EBITDA annually by year-end. LYB is confident in meeting strategic goals and rewarding shareholders. During the Q&A, Steve Byrne from Bank of America inquires about CapEx investments for circular plastics, to which Peter Vanacker responds, noting 20% of their CapEx is for C&LCS, expressing confidence in its growth.

The paragraph discusses the anticipation of future margins aligning with projections made at the Capital Markets Day in March 2023, highlighting an incremental margin of $500 per ton not including certain factors like the margin in the cracker. It mentions the ongoing investment in a MoReTec technology facility in Cologne with a 50,000-ton capacity, expected to contribute €25 million to €30 million incremental EBITDA by late 2026. Additionally, it addresses plans for a second, larger MoReTec investment in Houston. Patrick Cunningham from Citi questions if current conditions, marked by supply overhang and sluggish demand, suggest a new normal. Peter Vanacker responds, indicating expectations for an improved demand environment in the second half of 2025.

The paragraph discusses an increase in demand for polyethylene in North America, with domestic demand rising by 4% year-on-year and overall demand by 8%, driven by a favorable cost position enabling more exports, which grew by 12%. It also highlights a 4% year-on-year growth in the propylene oxide and derivatives business for 2024 compared to 2023, despite minimal increase in durable goods demand. There is limited new production capacity for polyethylene and polypropylene, and the company is well-positioned with its efficient, low-cost, and environmentally friendly operations. Demand for oxyfuels is growing globally. The paragraph ends with a financial question from Christopher Perrella regarding EBITDA growth in the first quarter amid market changes, which Peter Vanacker begins to address.

The paragraph discusses the impact of seasonality and operational changes on the company's first-quarter performance. It highlights that the first quarter begins where the fourth quarter ended, with higher costs for ethane, feedstocks, and energy. A significant turnaround at Channelview, including the shutdown of a number of lines to minimize the impact of a freeze, will result in slightly lower operating rates in certain areas. However, slightly higher rates are expected in I&D, Europe, Asia, and international O&P. North American demand for PE and PP is on a recovery trajectory, and the company remains confident moving towards 2025 with increasing demand and additional capacity in certain industries. Kim Foley adds that the turnaround involves taking down an olefins unit, a metathesis unit, and C4 processing, impacting propylene and C4 molecules, and affecting the optimization of ethylene costs.

The paragraph involves a discussion between Jeffrey Zekauskas from JPMorgan and Peter Vanacker, with a later interjection by Michael McMurray, regarding Lyondell's financial performance and dividend prospects. Vanacker highlights the company's strong cash flow generation in 2023 and 2024, emphasizing a strategic transformation planned for 2025 to maintain positive cash flow conversion. He suggests that Lyondell is well-positioned to continue increasing dividends though a decision is not yet made and will be determined by the Board in May. McMurray adds that the company's balance sheet and maturity profile are in excellent condition.

The paragraph discusses the company's disciplined approach to capital allocation, including rewarding shareholders with dividends and buying back shares. They have reduced their capital expenditure plans by $750 million for 2023-2025 due to market conditions but remain confident in their ability to grow dividends responsibly. Key strategic projects like MoReTec-2 and others at Channelview are not impacted. Peter Vanacker highlights their prioritization of CapEx during 2023-2025 in line with portfolio changes. Vincent Andrews from Morgan Stanley asks about potential capacity rationalization in Europe and the status of future projects in the technology sector, questioning whether they are being canceled or deferred.

In the paragraph, Peter Vanacker addresses strategic challenges facing the European market, particularly related to high energy costs and capacity rationalization. He notes that many companies are shutting down capacities and seeking regulatory support to sustain the industry in Europe. Although progress is being made on strategic assessments, no specific announcements can be made yet. He also mentions a decrease in demand for licenses in the technology segment and anticipates a slowdown in the construction of new capacities over the next five years. Frank Mitsch from Fermium Research then acknowledges Michael and Agustin and points out the low starting level in the first quarter due to energy and ethane prices, despite many proposed price increases.

The paragraph discusses the current state of the polyethylene market, focusing on pricing and margin expectations. Peter Vanacker highlights that there have been no major capacity increases in North America despite a surprising decline in polyethylene prices in Q4, even with balanced exports. Kim Foley adds that increased feedstock and energy costs are impacting ethylene prices, which influence polymer price dynamics. Producers like LYB have announced price increases, but predicting market outcomes remains uncertain. Additionally, with 5% of industry crackers offline, integrated producers may avoid buying expensive ethylene that would lead to negative margins in polyethylene production.

The paragraph discusses the dynamics of the propylene chain, highlighting the potential for margin and price improvements despite the lack of certainty. Kevin McCarthy from Vertical Research Partners inquires about the supply and demand of propylene and polypropylene. Peter Vanacker and Kim Foley respond, noting that the industry's shift to lighter feedstocks has decreased propylene supply, while China's investment in PDH units to convert propane to propylene has influenced global market dynamics. LyondellBasell, as an integrated producer, sees importance in both polypropylene and propylene oxide markets.

In the paragraph, the speaker announces the Final Investment Decision (FID) for their new metathesis unit, which will help manage propylene molecules more effectively as they shut down their refinery. Additionally, they are focusing on their joint venture in Saudi Arabia, NATPET, to expand polypropylene capacity. They are also conducting a European assessment after reducing capacity in Italy, aiming for strategic growth at lower costs. Peter Vanacker concludes by thanking the team for their performance and emphasizing the company's strategy to streamline and enhance LYB's asset footprint and product offerings.

The paragraph outlines the company's strategic strengths and ongoing initiatives: they feel equipped to handle current market challenges and are noticing early signs of improvement. They highlight a strong cash conversion rate and leading dividend yield, with plans to increase dividends by 2025. Additionally, they are successfully transforming the company to grow cost-advantaged operations and simplify their operating model. The call concludes with well wishes and a thank you from the operator.

This summary was generated with AI and may contain some inaccuracies.