LyondellBasell Industries NV (LYB) Q3 2025 Earnings Call Highlights: Strong Cash Flow and ...

This article first appeared on GuruFocus.

Cash Conversion: 135% in the third quarter. Cash from Operating Activities: $983 million. Earnings per Share (EPS): $1.01. EBITDA: $835 million. Dividends Returned to Shareholders: $443 million. Polyethylene Demand Growth: North American demand up by 2.5% year-to-date; European volumes up approximately 3% year-to-date. Capital Expenditures (CapEx) Reduction Target for 2026: Reduced to $1.2 billion. Fixed Cost Reductions Year-to-Date: $150 million. Cash Improvement Plan Target for 2025: $600 million. Olefins and Polyolefins Americas EBITDA: $428 million, a 35% improvement quarter-on-quarter. Olefins and Polyolefins Europe, Asia, and International EBITDA: $48 million. Intermediates and Derivatives EBITDA: $303 million. Advanced Polymer Solutions EBITDA: $47 million. Technology Segment EBITDA: $15 million. Operating Rates: Olefins and Polyolefins Americas at approximately 85%; Intermediates and Derivatives targeted at 75% for Q4.

Warning! GuruFocus has detected 8 Warning Signs with LYB. Is LYB fairly valued? Test your thesis with our free DCF calculator.

Release Date: October 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

LyondellBasell Industries NV (NYSE:LYB) achieved a high cash conversion rate of 135% in the third quarter, contributing to their cash improvement plan. The company is on track to deliver a $600 million cash flow increase by the end of 2025, with a target of $1.1 billion by the end of 2026. Polyethylene demand has shown signs of recovery, with North American demand up by 2.5% and European volumes up by 3% year-to-date. LYB's safety performance improved, with a total recordable incident rate of 0.12, better than last year's top decile results. The company is making progress on strategic initiatives, including the MoReTec 1 chemical recycling facility in Germany, and has reduced 2026 capital expenditures to $1.2 billion.

Negative Points

The company faces challenges from increased competition and margin pressures in polymers due to weak demand. There is significant volatility in U.S. exports caused by shifting trade and tariff policies. The European petrochemical industry is experiencing massive reductions in capacity due to regulatory burdens and high operating costs. LYB's Technology segment experienced a decrease in licensing profitability due to low licensing activity and lower catalyst volumes. The company anticipates typical seasonal trends of softer demand in the fourth quarter, which may pressure sales volumes and margins.

Story Continues

Q & A Highlights

Q: With the current polyethylene demand and potential capacity additions, how do you foresee the supply and demand dynamics affecting prices and margins into next year? A: Peter Vanacker, CEO, noted that while there is a spike in capacity, particularly in China, much of it is on the wrong side of the cost curve. He emphasized that demand for polyethylene remains robust, driven by consumer packaging and infrastructure investments. Kimberly Foley, EVP, added that new derivative capacity could tighten the ethylene market, potentially improving margins in 2026.

Q: Can you discuss the situation in China regarding plant operations and closures? A: Peter Vanacker explained that many Chinese plants are running at minimum technical capacity due to safeguarding employment, despite being on the wrong end of the cost curve. He mentioned that anti-involution measures could lead to significant capacity shutdowns, increasing confidence in future closures.

Q: How secure is the dividend given the current cash flow situation? A: Peter Vanacker assured that the company has a robust cash balance and is focused on disciplined capital allocation. He highlighted the importance of maintaining an investment-grade balance sheet and proactive engagement with credit agencies to support the dividend.

Q: Are there any growth projects included in the capital budget for next year, given the reduced CapEx? A: Peter Vanacker stated that past investments have created opportunities for growth, including Hyperzone and PO/TBA facilities. He mentioned ongoing projects like MoReTec 1 and acetyls technology, which are expected to contribute to future growth.

Q: What are the expectations for the Intermediates and Derivatives segment in 2026? A: Aaron Ledet, EVP, expressed optimism due to announced PO capacity rationalizations and investments in acetyls reliability. He noted that the PO/TBA facility is running beyond benchmark rates, providing additional capacity without extra CapEx.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments