Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.”).

Effective January 1, 2023, our Catalloy and polybutene-1 businesses were moved from the Advanced Polymer Solutions (“APS”) segment and reintegrated into the Olefins and Polyolefins-Americas (“O&P-Americas”) and Olefins and Polyolefins-Europe, Asia, International (“O&P-EAI”) segments. This move will allow the APS team to focus on our compounding and solutions business, and to develop a more agile operating model with meaningful regional and segment growth strategies. The segment information provided herein has been revised for all periods presented to reflect these changes.

OVERVIEW

Results for the third quarter of 2023 decreased slightly compared to the second quarter of 2023. Our O&P-Americas and O&P-EAI segment results decreased as global olefins and polyolefins margins were compressed by higher feedstock costs, tepid polymer demand in both the U.S. and Europe, and new industry capacity. These decreases were partially offset by an increase in North American polyethylene export volumes as global trade flows continued to normalize toward pre-pandemic levels. Intermediates and Derivatives (“I&D”) results improved significantly as a result of strong oxyfuels margins. Additionally, higher licensing revenues from contracts reaching significant milestones resulted in an improvement in Technology results.

Results for the first nine months of 2023 decreased compared to the first nine months of 2022. Global polyolefins margins decreased primarily due to a decline in average sales prices resulting in lower O&P-Americas and O&P-EAI segment results. APS segment results decreased primarily as a result of the impact of the first quarter 2023 goodwill impairment. Refining results declined primarily as a result of decreased margins.

During the first nine months of 2023 we generated $3,438 million in cash from operating activities. We remain committed to a disciplined approach to capital allocation, spending $1,047 million for capital expenditures and returning $1,415 million to shareholders through dividends and share repurchases.

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

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	10,625					$	10,306											$	31,178					$	40,245
Cost of sales			9,177						8,868												26,909						34,491
Impairments			25						—												277						69
Selling, general and administrative expenses			378						395												1,158						976
Research and development expenses			31						32												96						95
Operating income			1,014						1,011												2,738						4,614
Interest expense			(125)						(115)												(356)						(202)
Interest income			37						28												88						13
Other expense, net			(31)						(7)												(33)						(63)
Income (loss) from equity investments			6						(12)												11						25
Income from continuing operations before income taxes			901						905												2,448						4,387
Provision for income taxes			153						188												508						848
Income from continuing operations			748						717												1,940						3,539
Loss from discontinued operations, net of tax			(1)						(2)												(4)						(3)
Net income			747						715												1,936						3,536
Other comprehensive income (loss), net of tax –
Financial derivatives			17						3												24						213
Defined benefit pension and other postretirement benefit plans			2						2												6						134
Foreign currency translations			(86)						(31)												(58)						(355)
Total other comprehensive loss, net of tax			(67)						(26)												(28)						(8)
Comprehensive income			$	680					$	689											$	1,908					$	3,528

RESULTS OF OPERATIONS

Revenues—Revenues increased by $319 million, or 3%, in the third quarter of 2023 compared to the second quarter of 2023. Higher volumes primarily in our O&P-Americas and I&D Segments driven by higher demand resulted in a 2% increase in revenues. Average sales prices in the third quarter of 2023 were higher for our Refining and I&D segments, as sales prices generally correlate with crude oil prices, which increased relative to the second quarter of 2023. These price impacts resulted in a 1% increase in revenues.

Revenues decreased by $9,067 million, or 23%, in the first nine months of 2023 compared to the first nine months 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 first nine months of 2022. These lower prices led to the 23% decrease in revenues.

Cost of Sales—Cost of sales increased by $309 million, or 3% in the third quarter of 2023 compared to the second quarter of 2023 primarily driven by higher feedstock and energy costs. Cost of sales decreased by $7,582 million, or 22%, in the first nine months of 2023 compared to the first nine months of 2022, primarily driven by lower feedstock and energy costs.

Impairments—During the first nine months of 2023 we recognized a non-cash goodwill impairment charge of $252 million in our APS segment after the effect of moving our Catalloy and polybutene-1 businesses from our APS segment and reintegrating into our O&P-Americas and O&P-EAI segments. Additionally, we recognized a non-cash impairment charge of $25 million related to capital project costs in our O&P-Americas segment. During the first nine months of 2022 we recognized a non-cash impairment charge of $69 million related to the sale of our Australian polypropylene manufacturing facility. See Note 12 to our Consolidated Financial Statements for additional information.

SG&A Expenses—Selling, general and administrative (“SG&A”) expenses remained relatively unchanged in the third quarter of 2023 compared to the second quarter of 2023. SG&A expenses increased by $182 million, or 19%, in the first nine months of 2023 compared to the first nine months of 2022. Approximately 60% of this increase was attributable to higher employee-related expenses and the remaining increase was primarily driven by professional fees incurred for strategic projects.

Operating Income—Operating income remained relatively unchanged in the third quarter of 2023 compared to the second quarter of 2023. Operating income in our I&D, Technology and Refinery segments increased by $250 million, $64 million and $54 million, respectively. These increases were offset by decreases in our O&P-Americas, O&P-EAI and APS segments of $198 million, $149 million and $15 million, respectively.

Operating income decreased by $1,876 million, or 41%, in the first nine months of 2023 compared to the first nine months of 2022. Operating income in our O&P-Americas, Refining, APS, O&P-EAI, I&D and Technology segments decreased by $768 million, $434 million, $310 million, $251 million, $101 million and $16 million, respectively.

Results for each of our business segments are discussed further in the “Segment Analysis” section below.

Interest Expense—Interest expense remained relatively unchanged in the third quarter of 2023 compared to the second quarter of 2023. Interest expense increased by $154 million, or 76%, in the first nine months of 2023 compared to the first nine months of 2022. Approximately half of this increase was attributable to lower capitalized interest associated with our new PO/TBA plant which started-up in the first quarter of 2023. The remaining increase was primarily due to the impact of our fixed-for-floating interest rate swaps driven by higher interest rates in current year.

Income Taxes—Our effective income tax rate for the third quarter of 2023 was 17.0% compared to 20.8% for the second quarter of 2023. The lower effective income tax rate for the third quarter of 2023 is primarily attributable to an audit settlement recognized during the second quarter of 4.8%. Additionally, fluctuations in foreign exchange gains or losses, pre-tax income in countries with varying tax rates, and uncertain tax positions decreased the effective income tax rate by 0.9%, 0.8%, and 0.7%, respectively. These decreases were partially offset by a 4.4% increase in our effective income tax rate due to decreased exempt income.

Our effective income tax rate for the first nine months of 2023 was 20.8% compared to 19.3% for the first nine months of 2022. The higher effective tax rate for the first nine months of 2023 was primarily due to the first quarter 2023 goodwill impairment, for which there is no tax benefit, of 1.7% coupled with an audit settlement during the second quarter 2023 of 1.6%. These increases were partially offset by a 1.4% decrease in our effective income tax rate due to the increased relative impact of exempt income due to lower earnings.

Our income tax results are discussed further in Note 8 to the Consolidated Financial Statements.

Comprehensive Income—Comprehensive income decreased by $9 million in the third quarter of 2023 compared to the second quarter of 2023, primarily due to the net unfavorable impacts of unrealized changes in foreign currency translation adjustments partially offset by the increase in Net income. Comprehensive income decreased by $1,620 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to the decrease in Net income. The components of Other comprehensive income (loss) are discussed below.

Financial derivatives designated as cash flow hedges, primarily our forward-starting interest rate swaps, led to a decrease in Comprehensive income of $189 million in the first nine months of 2023 compared to the first nine months of 2022 due to periodic changes in the benchmark interest rates combined with a decrease in notional outstanding.

Defined pension and postretirement benefit plans led to a decrease of Comprehensive income of $128 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to pre-tax pension settlements in the second quarter of 2022.

Foreign currency translations decreased Comprehensive income by $55 million in the third quarter of 2023 compared to the second quarter of 2023, primarily due to the strengthening of the U.S. dollar relative to the euro, offset by the effective portion of our net investment hedges. Foreign currency translation increased Comprehensive income by $297 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to the strengthening of the U.S. dollar relative to the euro in the first nine months of 2022, offset by the effective portion of our net investment hedges.

See Notes 7 and 10 to our Consolidated Financial Statements for further discussions.

Segment Analysis

We use earnings from continuing operations before interest, income taxes, and depreciation and amortization (“EBITDA”) as our measure of profitability for segment reporting purposes. This measure of segment operating results is used by our chief operating decision maker to assess the performance of and allocate resources to our operating segments. Intersegment eliminations and items that are not directly related or allocated to business operations, such as foreign exchange gains or losses and components of pension and other postretirement benefits other than service costs are included in “Other”. See table below for a reconciliation of EBITDA to its nearest generally accepted accounting principles (“GAAP”) measure.

The following table presents the reconciliation of Net Income to EBITDA for each of the periods presented:

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of U.S. dollars			2023						2023												2023						2022
Net income			$	747					$	715											$	1,936					$	3,536
Loss from discontinued operations, net of tax			1						2												4						3
Income from continuing operations			748						717												1,940						3,539
Provision for income taxes			153						188												508						848
Depreciation and amortization			367						391												1,154						933
Interest expense, net			88						87												268						189
EBITDA			$	1,356					$	1,383											$	3,870					$	5,509

Our continuing operations are managed through six reportable segments: O&P-Americas, O&P-EAI, I&D, APS, Refining and Technology. Revenues and the components of EBITDA for the periods presented are reflected in the tables below by segment:

			Three Months Ended												Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues:
O&P-Americas segment			$	2,881					$	2,727											$	8,416					$	11,662
O&P-EAI segment			2,446						2,729												8,067						10,932
I&D segment			3,081						2,662												8,425						10,388
APS segment			899						960												2,856						3,301
Refining segment			2,665						2,459												7,314						9,260
Technology segment			218						154												511						548
Other, including intersegment eliminations			(1,565)						(1,385)												(4,411)						(5,846)
Total			$	10,625					$	10,306											$	31,178					$	40,245
Operating income (loss):
O&P-Americas segment			$	326					$	524											$	1,221					$	1,989
O&P-EAI segment			(95)						54												(20)						231
I&D segment			611						361												1,292						1,393
APS segment			(6)						9												(244)						66
Refining segment			51						(3)												234						668
Technology segment			134						70												265						281
Other, including intersegment eliminations			(7)						(4)												(10)						(14)
Total			$	1,014					$	1,011											$	2,738					$	4,614
Depreciation and amortization:
O&P-Americas segment			$	147					$	144											$	435					$	442
O&P-EAI segment			53						47												148						136
I&D segment			106						117												333						245
APS segment			24						24												70						71
Refining segment			25						49												135						11
Technology segment			12						10												33						28
Total			$	367					$	391											$	1,154					$	933

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Income (loss) from equity investments:
O&P-Americas segment			$	6					$	12											$	41					$	81
O&P-EAI segment			(3)						(19)												(21)						(39)
I&D segment			3						(5)												(8)						(17)
APS segment			—						—												(1)						—
Total			$	6					$	(12)											$	11					$	25
Other (expense) income, net:
O&P-Americas segment			$	—					$	(1)											$	2					$	(31)
O&P-EAI segment			—						2												9						(2)
I&D segment			(12)						(1)												(11)						(40)
APS segment			—						1												1						4
Refining segment			—						1												—						(7)
Technology segment			—						(1)												—						(2)
Other, including intersegment eliminations			(19)						(8)												(34)						15
Total			$	(31)					$	(7)											$	(33)					$	(63)
EBITDA:
O&P-Americas segment			$	479					$	679											$	1,699					$	2,481
O&P-EAI segment			(45)						84												116						326
I&D segment			708						472												1,606						1,581
APS segment			18						34												(174)						141
Refining segment			76						47												369						672
Technology segment			146						79												298						307
Other, including intersegment eliminations			(26)						(12)												(44)						1
Total			$	1,356					$	1,383											$	3,870					$	5,509

Olefins and Polyolefin-Americas Segment

Overview—EBITDA decreased in the third quarter of 2023 compared to the second quarter of 2023 and in the first nine months of 2023 relative to the first nine months of 2022 primarily driven by lower polyolefin margins.

*Ethylene Raw Materials—*Ethylene and its co-products are produced from two major raw material groups:

*•*natural gas liquids (“NGLs”), principally ethane and propane, the prices of which are generally affected by natural gas prices; and

• crude oil-based liquids (“liquids” or “heavy liquids”), including naphtha, condensates and gas oils, the prices of which are generally related to crude oil prices.

We have flexibility to vary the raw material mix and process conditions in our U.S. olefins plants in order to maximize profitability as market prices fluctuate for both feedstocks and products. Although prices of crude-based liquids and natural gas liquids are generally related to crude oil and natural gas prices, during specific periods the relationships among these materials and benchmarks may vary significantly. In the third and second quarter of 2023, and the first nine months of 2023 and 2022, approximately 70% to 80% of the raw materials used in our North American crackers was ethane.

The following table sets forth selected financial information for the O&P-Americas segment including Income from equity investments, which is a component of EBITDA:

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	2,881					$	2,727											$	8,416					$	11,662
Income from equity investments			6						12												41						81
EBITDA			479						679												1,699						2,481

Revenue—Revenues for our O&P-Americas segment increased by $154 million, or 6% in the third quarter of 2023 compared to the second quarter of 2023 and decreased by $3,246 million, or 28%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Revenue increased by 8% as a result of higher volumes driven by improved export demand for polyethylene. Lower average sales prices driven by increased polyolefin market supply led to a 2% decrease in revenue.

First nine months of 2023 versus first nine months of 2022—Lower average sales prices across all products resulted in a 27% decrease in revenue primarily driven by increased market supply. Lower volumes resulted in a 1% decrease in revenue.

EBITDA—EBITDA decreased by $200 million, or 29%, in the third quarter of 2023 compared to the second quarter of 2023 and by $782 million, or 32%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Lower polyethylene results led to a 16% decrease in EBITDA due to lower integrated margins driven by higher feedstock costs and new industry capacity. Lower olefins results led to a 4% decrease in EBITDA primarily due to lower ethylene volumes resulting from planned maintenance.

First nine months of 2023 versus first nine months of 2022—Lower polyolefins results led to a 32% decrease in EBITDA primarily driven by lower margins as a result of lower average sales prices reflecting tepid demand and new industry capacity.

Olefins and Polyolefin-Europe, Asia, International Segment

Overview—EBITDA decreased in the third quarter of 2023 compared to the second quarter of 2023, primarily due to lower margins across most businesses. EBITDA decreased in the first nine months of 2023 relative to the first nine months of 2022 primarily as a result of lower polymer margins partially offset by higher olefins volumes.

*Quality Circular Polymers—*In April 2023, we acquired the remaining 50% interest in Quality Circular Polymers (“QCP”). As a result of the acquisition, QCP became a wholly owned subsidiary and is included in our O&P-EAI consolidated results prospectively from the acquisition date.

Ethylene Raw Materials—In Europe, naphtha is the primary raw material for our ethylene production and represented approximately 55% to 65% of the raw materials used in the third and second quarter of 2023, and the first nine months of 2023 and 2022.

The following table sets forth selected financial information for the O&P-EAI segment including Loss from equity investments, which is a component of EBITDA:

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	2,446					$	2,729											$	8,067					$	10,932
Loss from equity investments			(3)						(19)												(21)						(39)
EBITDA			(45)						84												116						326

Revenue—Revenues decreased by $283 million, or 10%, in the third quarter of 2023 compared to the second quarter of 2023 and by $2,865 million, or 26%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Lower average sales prices resulted in a 6% decrease in revenue from weak demand despite crude oil prices, which, on average, increased compared to the second quarter of 2023. Lower volumes resulted in a revenue decrease of 4% primarily due to a decline in demand.

First nine months of 2023 versus first nine months of 2022—Lower average sales prices resulted in a 25% decrease in revenue as sales prices generally correlate with crude oil prices, which, on average, decreased compared to the first nine months of 2022. Lower volumes resulted in a revenue decrease of 2% primarily due to a decline in demand. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

EBITDA—EBITDA decreased by $129 million, or 154%, in the third quarter of 2023 compared to the second quarter of 2023 and by $210 million, or 64%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Lower olefins results led to an 83% decrease in EBITDA primarily driven by lower margins as a result of weak demand and higher naphtha costs. Lower polymer results led to a 69% decrease in EBITDA primarily driven by lower margins due to decreased demand as European markets remain challenging.

First nine months of 2023 versus first nine months of 2022—Lower polymer results led to a 117% decrease in EBITDA primarily driven by decreased margins resulting from lower average sales prices reflecting weak demand. Higher olefins results led to a 30% increase in EBITDA primarily driven by higher volumes resulting from the absence of planned and unplanned downtime. During the first nine months of 2022, we recognized a $69 million non-cash impairment charge in conjunction with the sale of our polypropylene manufacturing facility located in Australia. The absence of a similar charge in the first nine months of 2023 resulted in a 21% change in EBITDA. See Note 12 to the Consolidated Financial Statements for additional information.

Intermediates and Derivatives Segment

Overview—EBITDA increased in the third quarter of 2023 compared to the second quarter of 2023, primarily driven by margin improvements for oxyfuels and related products. EBITDA increased in the first nine months of 2023 compared to the first nine months of 2022, primarily driven by an increase in volumes for oxyfuels and related products, partially offset by lower margins for propylene oxide and derivatives.

The following table sets forth selected financial information for the I&D segment including Income (loss) from equity investments, which is a component of EBITDA:

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	3,081					$	2,662											$	8,425					$	10,388
Income (loss) from equity investments			3						(5)												(8)						(17)
EBITDA			708						472												1,606						1,581

Revenue—Revenues increased by $419 million, or 16%, in the third quarter of 2023 compared to the second quarter of 2023 and decreased by $1,963 million, or 19%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Higher average sales prices resulted in a 10% increase in revenue driven primarily by oxyfuels and related products resulting from tight industry supply. Sales volumes improved resulting in a 6% increase in revenue driven by improved demand.

First nine months of 2023 versus first nine months of 2022—Lower average sales prices resulted in a 22% decrease in revenue driven by lower pricing as a result of lower demand. Sales volumes increased resulting in a 2% increase in revenue due to additional PO/TBA capacity. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

EBITDA—EBITDA increased by $236 million, or 50%, in the third quarter of 2023 compared to the second quarter of 2023 and by $25 million, or 2%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Oxyfuels and related products results increased EBITDA by 51% primarily driven by margin improvement as a result of higher sales prices reflecting tight supply from industry downtime.

First nine months of 2023 versus first nine months of 2022—Improved oxyfuels and related products results led to an EBITDA increase of 27% driven primarily by higher volumes as a result of strong demand and increased PO/TBA capacity. Propylene oxide and derivatives results drove a 23% decrease in EBITDA as margins declined due to lower demand.

Advanced Polymer Solutions Segment

Overview—EBITDA decreased in the third quarter of 2023 relative to the second quarter of 2023 driven by reduced demand. EBITDA decreased in the first nine months of 2023 compared to the first nine months of 2022 primarily due to the recognition of a non-cash goodwill impairment charge in the first quarter of 2023.

The following table sets forth selected financial information for the APS segment including Loss from equity investments, which is a component of EBITDA:

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	899					$	960											$	2,856					$	3,301
Loss from equity investments			—						—												(1)						—
EBITDA			18						34												(174)						141

Revenue—Revenues decreased by $61 million, or 6%, in the third quarter of 2023 compared to the second quarter of 2023 and by $445 million, or 13%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Average sales prices decreased resulting in a 6% decrease in revenue.

First nine months of 2023 versus first nine months of 2022—Average sales price decreased resulting in an 11% decrease in revenue. Sales volumes decreased resulting in a 3% decrease in revenue stemming from lower demand. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

EBITDA—EBITDA decreased by $16 million or 47% in the third quarter of 2023 compared to the second quarter of 2023 and by $315 million or 223% in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—The decline in EBITDA was primarily driven by reduced demand.

First nine months of 2023 versus first nine months of 2022—During the first nine months of 2023 we recognized a non-cash goodwill impairment charge of $252 million after the effect of moving our Catalloy and polybutene-1 businesses from our APS segment and reintegrating them into our O&P-Americas and O&P-EAI segments. This impairment charge resulted in a 179% decrease in EBITDA. See Note 12 to our Consolidated Financial Statements for additional information. Lower volumes resulted in a 31% decrease in EBITDA as a result of a decline in demand. Margins declined resulting in a 16% decrease in EBITDA primarily as a result of increased manufacturing costs.

Refining Segment

Overview—EBITDA increased in the third quarter of 2023 compared to the second quarter of 2023 primarily due to a decrease in costs related to our planned exit from the refining business. EBITDA decreased in the first nine months of 2023 compared to the first nine months of 2022 due to lower margins and an increase in costs incurred related to the planned exit from the refining business.

The following table sets forth selected financial information and heavy crude oil processing rates for the Refining segment and the U.S. refining market margins for the applicable periods. “Brent” is a light sweet crude oil and is one of the main benchmark prices for purchases of oil worldwide. “Maya” is a heavy sour crude oil grade produced in Mexico that is a relevant benchmark for heavy sour crude oils in the U.S. Gulf Coast market. References to industry benchmarks for refining market margins are to industry prices reported by Platts, a division of S&P Global.

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	2,665					$	2,459											$	7,314					$	9,260
EBITDA			76						47												369						672
Thousands of barrels per day
Heavy crude oil processing rates			248						245												240						241
Market margins, dollars per barrel
Brent - 2-1-1			$	32.19					$	25.11											$	28.91					$	34.45
Brent - Maya differential			8.53						14.34												14.09						9.95
Total Maya 2-1-1			$	40.72					$	39.45											$	43.00					$	44.40

Revenue—Revenues increased by $206 million, or 8%, in the third quarter of 2023 compared to the second quarter of 2023 and decreased by $1,946 million, or 21%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 second first quarter of 2023—Higher product prices led to a revenue increase of 11% due to an average Brent crude oil price increase of approximately $7.94 per barrel. Sales volumes decreased due to planned outages resulting in a 3% decrease in revenue.

First nine months of 2023 versus first nine months of 2022—Lower product prices led to a revenue decrease of 23% due to an average Brent crude oil price decrease of approximately $20.27 per barrel. Sales volumes increased 2% due to higher operating rates at our downstream units.

EBITDA—EBITDA increased by $29 million, or 62%, in the third quarter of 2023 compared to the second quarter of 2023 and decreased by $303 million, or 45%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—A decrease in costs related to our planned exit from the refining business, driven by our decision to extend the operations of our Houston refinery to no later than the end of the first quarter of 2025, resulted in an 81% increase in EBITDA. Despite an increase in the Maya 2-1-1 industry crack spread of approximately $2 per barrel to $41 per barrel in the third quarter, margin declined due to the impact of commodity hedges resulting in a 32% decrease in EBITDA.

First nine months of 2023 versus first nine months of 2022—Lower margins drove a 33% decrease in EBITDA primarily due to lower operating yields of higher-value refined products. An increase in costs incurred related to our planned exit from the refining business in the first nine months of 2023 compared to the first nine months of 2023 resulted in a 12% decrease in EBITDA. See Note 12 to the Consolidated Financial Statements for additional information regarding our planned exit of the

refining business.

Technology Segment

Overview—EBITDA increased in the third quarter of 2023 compared to the second quarter of 2023 primarily due to higher licensing revenues as contracts reached significant milestones. EBITDA decreased in the first nine months of 2023 relative to the first nine months of 2022 primarily driven by lower catalyst volumes partially offset by higher catalyst margins.

The following table sets forth selected financial information for the Technology segment:

			Three Months Ended																		Nine Months Ended
			September 30,						June 30,												September 30,						September 30,
Millions of dollars			2023						2023												2023						2022
Sales and other operating revenues			$	218					$	154											$	511					$	548
EBITDA			146						79												298						307

Revenue—Revenues increased by $64 million, or 42%, in the third quarter of 2023 compared to the second quarter of 2023 and decreased by $37 million, or 7%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Licensing revenues increased by 31% as contracts reached significant milestones during the quarter. Higher catalyst volumes resulted in a 7% increase in revenues. Higher average catalyst sales price resulted in a 4% increase in revenues.

First nine months of 2023 versus first nine months of 2022—Lower catalyst volumes resulted in a 12% decrease in revenue primarily driven by lower demand. Higher licensing revenues resulting from contracts reaching significant milestones drove a 3% increase in revenue. Favorable foreign exchange impact increased revenue by 2%.

EBITDA—EBITDA increased by $67 million, or 85%, in the third quarter of 2023 compared to the second quarter of 2023 and decreased by $9 million, or 3%, in the first nine months of 2023 compared to the first nine months of 2022.

Third quarter of 2023 versus second quarter of 2023—Licensing revenues increased primarily due to contracts reaching significant milestone resulting in a 63% increase in EBITDA. Higher catalyst results increased EBITDA 21% driven by higher demand.

First nine months of 2023 versus first nine months of 2022—Lower catalyst volumes driven by lower demand resulted in a 17% decrease in EBITDA. Higher catalyst margins resulted in a 7% increase in EBITDA. Higher licensing revenues from contracts reaching significant milestones resulted in a 3% increase in EBITDA. Favorable foreign exchange impact increased EBITDA by 2%.

FINANCIAL CONDITION

Operating, investing and financing activities of continuing operations, which are discussed below, are presented in the following table:

			Nine Months Ended September 30,
Millions of dollars			2023						2022
Cash provided by (used in):
Operating activities			$	3,438					$	4,515
Investing activities			(1,171)						(1,433)
Financing activities			(1,545)						(2,929)

Operating Activities—Cash provided by operating activities of $3,438 million in the first nine months of 2023 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital—Accounts receivable, Inventories, and Accounts payable.

In the first nine months of 2023, the main components of working capital used $447 million of cash driven primarily by increases in Accounts receivable and Inventories. The increase in Accounts receivable was primarily driven by higher average sales prices in our I&D and Refining segments. The increase in Inventories was primarily to support operating rates and industry demand for our O&P-Americas and Refining segments, partially offset by lower inventory in our APS segment driven by lower average costs and volumes.

Cash provided by operating activities of $4,515 million in the first nine months of 2022 primarily reflected earnings adjusted for non-cash items and cash used by the main components of working capital.

In the first nine months of 2022, the main components of working capital used $267 million of cash driven primarily by an increase in Inventories partially offset by a decrease in Accounts receivable and an increase in Accounts payable. The increase in Inventories was primarily due to inventory build following planned and unplanned outages. The decrease in Accounts receivable was driven by lower revenues across most businesses primarily as a result of lower average sales prices and lower sales volume. The increase in Accounts payable was primarily driven by higher energy costs and higher raw material costs for our Refining and I&D segments.

Investing Activities—Capital expenditures in the first nine months of 2023 totaled $1,047 million compared to $1,417 million in the first nine months of 2022. Approximately 35% and 50% of our capital expenditures in the first nine months of 2023 and 2022, respectively, was for profit-generating growth projects, primarily our PO/TBA plant, with the remaining expenditures supporting sustaining maintenance. See Note 12 to the Consolidated Financial Statements for additional information regarding capital expenditures by segment.

In the first nine months of 2023, foreign currency contracts with an aggregate notional value of €500 million expired. Upon settlement of these foreign currency contracts, we paid €500 million ($550 million at the expiry spot rate) to our counterparties and received $612 million from our counterparties.

In the first nine months of 2022, foreign currency contracts with an aggregate notional value of €500 million expired. Upon settlement of these foreign currency contracts, we paid €500 million ($501 million at the expiry spot rate) to our counterparties and received $614 million from our counterparties.

Financing Activities—We made dividend payments totaling $1,204 million and $2,859 million, which included a special dividend of $5.20 per share totaling $1,704 million paid in June 2022, in the first nine months of 2023 and 2022, respectively. Additionally, in the first nine months of 2023 and 2022, we made payments of $211 million and $420 million to repurchase outstanding ordinary shares, respectively.

In May 2023, we issued $500 million of 5.625% guaranteed notes due 2033. For additional detail see Note 6 to the Consolidated Financial Statements.

In July 2023, we repaid the $425 million remaining of outstanding principal on our 4.0% guaranteed notes due 2023.

Through the repurchase and issuance of commercial paper instruments under our commercial paper program, we made net repayments of $200 million in the first nine months of 2023 and received net proceeds of $96 million in the first nine months of 2022.

In the first nine months of 2022, we received a return of collateral of $238 million, related to the positions held with our counterparties for certain forward-starting interest rate swaps.

Liquidity and Capital Resources

Overview

We plan to fund our working capital, capital expenditures, debt service, dividends and other cash requirements with our current available liquidity and cash from operations, which could be affected by general economic, financial, competitive, legislative, regulatory, business and other factors, many of which are beyond our control. Debt repayment, and the purchase of shares under our share repurchase authorization, may be funded from cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt, or a combination thereof.

As part of our overall capital allocation strategy, we plan to provide returns to shareholders in the form of dividends and share repurchases. Barring any significant or unforeseen business challenges, mergers or acquisitions, over the long-term, we are targeting shareholder returns of 70% of free cash flow, defined as net cash provided by operating activities less capital expenditures. We intend to continue to declare and pay quarterly dividends, with the goal of increasing the dividend over time, after giving consideration to our cash balances and expected results from operations. Our focus on funding our dividends while remaining committed to a strong investment grade balance sheet continues to be the foundation of our capital allocation strategy.

Cash and Liquid Investments

As of September 30, 2023, we had Cash and cash equivalents totaling $2,833 million, which includes $1,638 million in jurisdictions outside of the U.S., the majority of which is held within the European Union and the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.

Credit Arrangements

At September 30, 2023, we had total debt, including current maturities, of $11,106 million. Additionally, we had $192 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities to support trade payables and other obligations.

We had total unused availability under our credit facilities of $4,150 million at September 30, 2023, which included the following:

• $3,250 million under our $3,250 million Senior Revolving Credit Facility, which backs our $2,500 million commercial paper program. Availability under this facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. At September 30, 2023, we had no outstanding commercial paper and no borrowings or letters of credit outstanding under this facility; and

• $900 million under our $900 million U.S. Receivables Facility. Availability under this facility is subject to a borrowing base of eligible receivables, which is reduced by outstanding borrowings and letters of credit, if any. At September 30, 2023, we had no borrowings or letters of credit outstanding under this facility.

At any time and from time to time, we may repay or redeem our outstanding debt, including purchases of our outstanding bonds in the open market, through privately negotiated transactions or a combination thereof, in each case using cash and cash equivalents, cash from our short-term investments, cash from operating activities, proceeds from the issuance of debt or proceeds from asset divestitures. Any repayment or redemption of our debt will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In connection with such repurchases or redemptions, we may incur cash and non-cash charges, which could be material in the period in which they are incurred.

Share Repurchases

In May 2023, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 19, 2024, which superseded any prior repurchase authorizations. Our share repurchase authorization does not have a stated dollar amount, and purchases may be made through open market purchases, private market transactions or other structured transactions. Repurchased shares could be retired or used for general corporate purposes, including for various employee benefit and compensation plans. 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. In the first nine months of 2023, we purchased approximately 2.3 million shares under our share repurchase authorizations for $211 million.

As of October 25, 2023, we had approximately 33.1 million shares remaining under the current authorization. The timing and amounts of additional shares repurchased, if any, will be determined based on our evaluation of market conditions and other factors, including any additional authorizations approved by our shareholders. For additional information related to our share repurchase authorizations, see Note 10 to the Consolidated Financial Statements.

Capital Budget

In 2023, we are planning to invest approximately $1.7 billion in capital expenditures. Approximately 70% of the 2023 budget is planned for sustaining maintenance, with the remaining budget supporting profit-generating growth projects.

CURRENT BUSINESS OUTLOOK

In the fourth quarter of 2023, we expect seasonally softer demand across most businesses. Higher feedstock costs, new industry capacity and the slow pace of Chinese demand growth continue to pressure global olefins and polyolefins margins. Oxyfuels and refining margins are expected to decrease following the conclusion of the summer driving season. Nonetheless, oxyfuels margins are expected to remain well above historical averages. During the fourth quarter, we expect to operate our assets in line with market demand with average operating rates of 85% for our O&P-Americas assets, 75% for European O&P-EAI assets and 70% for I&D assets.

Value Enhancement Program

During 2022, we introduced our value enhancement program that is anticipated to generate approximately $575 million in recurring annual Net income improvement by the end of 2025, which, after adding back income taxes and depreciation and amortization of $140 million and $35 million, respectively, results in $750 million of recurring annual EBITDA.

Our value enhancement program is progressing ahead of schedule. As a result, during the second quarter we announced that the program’s near-term target was increased by approximately 30% to $150 million of Net income and $200 million of recurring annual EBITDA by year end 2023. EBITDA excludes income taxes and depreciation and amortization of approximately $35 million and $15 million, respectively. Management expects to exceed this target.

We estimated incurring costs of $150 million in 2023 to achieve this milestone. Net income and recurring annual EBITDA for the value enhancement program is estimated based on 2017 through 2019 mid-cycle margins and modest inflation relative to a 2021 baseline year.

CRITICAL ACCOUNTING POLICIES

Goodwill Impairment—We evaluate the recoverability of the carrying value of goodwill annually or more frequently if events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable.

Effective January 1, 2023, our Catalloy and polybutene-1 businesses were moved from our APS segment and reintegrated into our O&P-Americas and O&P-EAI segments. When moved, a portion of the APS reporting unit’s goodwill was allocated to the O&P-Americas and O&P-EAI segments based on the businesses’ relative fair values compared to the reportable segment.

In the first quarter of 2023, we evaluated goodwill for impairment immediately before and after the transfer of these businesses. Our evaluation resulted in the recognition of a non-cash goodwill impairment of $252 million recognized in our APS segment. Refer to Note 12 to our Consolidated Financial Statements.

Fair values were determined utilizing a discounted cash flow method under the income approach and assumptions including management’s view on long-term growth rates in our industry, discount rates and other assumptions based on a market participant perspective, which are inherently subjective. Discount rates utilized in our cash flow model were based on a variety of factors, including market and economic conditions, the risk and nature of the cash flows and the rate of return required by market participants. We believe our fair value estimates of projected financial information are reasonable and consistent with those used in our planning, capital investment and business performance reviews. However, actual results may differ from these projections.

An estimate of the sensitivity to net income resulting from impairment calculations is not practicable, given the numerous assumptions, including pricing, volumes and discount rates, which could materially affect our estimates. That is, unfavorable adjustments to some of the above listed assumptions may be offset by favorable adjustments in other assumptions.

ACCOUNTING AND REPORTING CHANGES

For a discussion of the potential impact of new accounting pronouncements on our Consolidated Financial Statements, see Note 2 to the Consolidated Financial Statements.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify our forward-looking statements by the words “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions.

We based forward-looking statements on our current expectations, estimates and projections of our business and the industries in which we operate. We caution you that these statements are not guarantees of future performance. They involve assumptions about future events that, while made in good faith, may prove to be incorrect, and involve risks and uncertainties we cannot predict. Our actual outcomes and results may differ materially from what we have expressed or forecast in the forward-looking statements. Any differences could result from a variety of factors, including the following:

• the cost of raw materials represents a substantial portion of our operating expenses, and energy costs generally follow price trends of crude oil, natural gas liquids and/or natural gas; price volatility can significantly affect our results of operations and we may be unable to pass raw material and energy cost increases on to our customers due to the significant competition that we face, the commodity nature of our products and the time required to implement pricing changes;

• our operations in the United States (“U.S.”) have benefited from low-cost natural gas and natural gas liquids; decreased availability of these materials (for example, from their export or regulations impacting hydraulic fracturing in the U.S.) could reduce the current benefits we receive;

• if crude oil prices are low relative to U.S. natural gas prices, we could see less benefit from low-cost natural gas and natural gas liquids and it could have a negative effect on our results of operations;

• industry production capacities and operating rates may lead to periods of oversupply and low profitability;

• we may face unplanned operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failures, unscheduled downtime, supplier disruptions, labor shortages, strikes, work stoppages or other labor difficulties, transportation interruptions, spills and releases and other environmental incidents) at any of our facilities, which would negatively impact our operating results;

• changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate could increase our costs, restrict our operations and reduce our operating results;

• our ability to execute our organic growth plans may be negatively affected by our ability to complete projects on time and on budget;

• our ability to acquire or dispose of product lines or businesses could disrupt our business and harm our financial condition;

• our ability to successfully implement initiatives identified pursuant to our value enhancement program and generate anticipated earnings;

• uncertainties associated with worldwide economies could create reductions in demand and pricing, as well as increased counterparty risks, which could reduce liquidity or cause financial losses resulting from counterparty default;

• the negative outcome of any legal, tax and environmental proceedings or changes in laws or regulations regarding legal, tax and environmental matters may increase our costs, reduce demand for our products, or otherwise limit our ability to achieve savings under current regulations;

• any loss or non-renewal of favorable tax treatment under tax agreements or tax treaties, or changes in tax laws, regulations or treaties, may substantially increase our tax liabilities;

• we may be required to reduce production or idle certain facilities because of the cyclical and volatile nature of the supply-demand balance in the chemical and refining industries, which would negatively affect our operating results;

• we rely on continuing technological innovation, and an inability to protect our technology, or others’ technological developments could negatively impact our competitive position;

• we may be unable to continue operations until the shutdown of the Houston refinery within the expected timeframe or without incurring additional charges or expenses;

• we have significant international operations, and fluctuations in exchange rates, valuations of currencies and our possible inability to access cash from operations in certain jurisdictions on a tax-efficient basis, if at all, could negatively affect our liquidity and our results of operations;

• we are subject to the risks of doing business at a global level, including wars, terrorist activities, political and economic instability and disruptions and changes in governmental policies, which could cause increased expenses, decreased demand or prices for our products and/or disruptions in operations, all of which could reduce our operating results;

• if we are unable to achieve our emission reduction, circularity, or other sustainability targets, it could result in reputational harm, changing investor sentiment regarding investment in our stock or a negative impact on our access to and cost of capital;

• if we are unable to comply with the terms of our credit facilities, indebtedness and other financing arrangements, those obligations could be accelerated, which we may not be able to repay; and

• we may be unable to incur additional indebtedness or obtain financing on terms that we deem acceptable, including for refinancing of our current obligations; higher interest rates and costs of financing would increase our expenses.

Any of these factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. Our management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.

All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section and any other cautionary statements that may accompany such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements.