LyondellBasell Industries 10-Q 2022-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended September 30, 2022

or

For the transition period from to

Commission file number: 001-34726

LYONDELLBASELL INDUSTRIES N.V.

(Exact name of registrant as specified in its charter)

(Addresses of registrant’s principal executive offices)

(Registrant’s telephone numbers, including area codes)

______________________________________________________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had 325,624,433 ordinary shares, €0.04 par value, outstanding at October 26, 2022 (excluding 14,798,065 treasury shares).

LYONDELLBASELL INDUSTRIES N.V.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF INCOME

See Notes to the Consolidated Financial Statements.

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See Notes to the Consolidated Financial Statements.

LYONDELLBASELL INDUSTRIES N.V.

CONSOLIDATED BALANCE SHEETS

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GENERAL

This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements, and the accompanying notes elsewhere in this report. Unless otherwise indicated, the “Company”, “we”, “us,” “our” or similar words are used to refer to LyondellBasell Industries N.V. together with its consolidated subsidiaries (“LyondellBasell N.V.”).

OVERVIEW

During the third quarter of 2022 our results declined compared to the second quarter of 2022. Higher energy costs, new supply and weaker markets pressured global petrochemical margins. Global demand for our products utilized in consumer packaging remained stable, but demand from durable goods markets softened. In Europe, olefins, polyolefins and intermediate chemicals markets encountered significantly higher energy costs and weak demand. In response to these challenging conditions, we postponed the restart of our ethylene cracker in France until the first quarter of 2023 and reduced operating rates across our global asset base to match lower demand. In China, markets remained weak due to zero-COVID measures and tepid growth. In North America, new supply and inventory destocking led to declines in polyolefins prices. The impacts of higher energy, raw material, labor and transportation costs were reflected in our Advanced Polymers Solutions results. Our oxyfuels and refining businesses continued to earn margins above historical averages. Lastly we launched our value enhancement program, which we expect will generate $750 million in recurring annual EBITDA by the end of 2025.

During the first nine months of 2022 our results decreased compared to the first nine months of 2021, primarily due to lower results in our O&P—Americas segment driven by lower olefin margins, and in our O&P—EAI segment driven by lower volumes and margins across most businesses, lower income from equity investments and the unfavorable impacts of foreign exchange. These declines were partially offset by higher margins in our Refining and Intermediates & Derivatives segments.

During the third quarter and first nine months of 2022 we generated $1,414 million and $4,515 million in cash from operating activities, respectively. We remain committed to a disciplined approach to capital allocation. During the first nine months of 2022 we paid dividends of $2,859 million to shareholders, which included a special dividend and increased quarterly dividend, and repurchased $420 million worth of our shares.

Results of operations for the periods discussed are presented in the table below:

RESULTS OF OPERATIONS

Revenues—Revenues decreased by $2,588 million, or 17%, in the third quarter of 2022 compared to the second quarter of 2022. Average sales prices were lower for many of our products as sales prices generally correlate with crude oil prices, which decreased relative to the second quarter of 2022 coupled with lower demand across most of our segments and increased industry supply in our O&P*—*Americas and I&D segments. These lower prices led to a 12% decrease in revenue. Lower volumes driven by reduced demand resulted in a 3% decrease in Revenues. Unfavorable foreign exchange impacts resulted in a 2% decrease in Revenues.

Revenues increased by $6,902 million, or 21%, in the first nine months of 2022 compared to the first nine months of 2021. Average sales prices were higher for many of our products as sales prices generally correlate with crude oil prices, which increased relative to the first nine months of 2021. These higher prices led to a 22% increase in revenue. Higher volumes driven by improved demand resulted in a 3% increase in Revenues. Unfavorable foreign exchange impacts resulted in a 4% decrease in Revenues.

Cost of Sales—Cost of sales decreased by $1,179 million, or 10%, in the third quarter of 2022 compared to the second quarter of 2022. These decreases were primarily related to lower feedstock costs.

Cost of sales increased $8,028 million, or 30%, in the first nine months of 2022 compared to the first nine months of 2021. These increases were primarily related to higher feedstock and energy costs.

Operating Income—Operating income decreased by $1,329 million, or 62%, in the third quarter of 2022 compa

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Our exposure to market and regulatory risks is described in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021. Our exposure to such risks has not changed materially in the nine months ended September 30, 2022.

As of September 30, 2022, with the participation of our management, our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer) carried out an evaluation, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Act”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Act). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2022.

There have been no changes in our internal controls over financial reporting, as defined in Rule 13a-15(f) of the Act, in the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Information regarding our litigation and legal proceedings can be found in Note 10 to the Consolidated Financial Statements, which is incorporated into this Item 1 by reference.

In September 2013, U.S. Environmental Protection Agency Region V issued a Notice and Finding of Violation alleging violations at our Morris, Illinois facility related to flaring activity. In July 2022, we entered into a final settlement agreement providing for a civil penalty of $324,000 and the installation of monitoring and control equipment. The consent decree approving the settlement was entered by the court and is now effective.

Additional information about our environmental proceedings can be found in Part I, Item 3 of our 2021 Annual Report on Form 10-K, which is incorporated into this Item 1 by reference.

There have been no material changes to the risk factors associated with our business previously disclosed in “Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 27, 2022, our shareholders approved a share repurchase authorization of up to 34,026,947 shares of our ordinary shares, through November 27, 2023, which superseded any prior repurchase authorizations. The maximum number of shares that may yet be purchased is not necessarily an indication of the number of shares that will ultimately be purchased.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

+ Management contract or compensatory plan, contract or arrangement

• Filed herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.