filings.toolsItem 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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Item 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Millions of dollars, except earnings per share | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| Trade | $ | 10,398 | $ | 10,149 | $ | 20,155 | $ | 20,225 | |||||||||||||||
| Related parties | 160 | 157 | 328 | 328 | |||||||||||||||||||
| 10,558 | 10,306 | 20,483 | 20,553 | ||||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Cost of sales | 9,148 | 8,868 | 17,911 | 17,732 | |||||||||||||||||||
| Impairments | — | — | — | 252 | |||||||||||||||||||
| Selling, general and administrative expenses | 407 | 395 | 833 | 780 | |||||||||||||||||||
| Research and development expenses | 33 | 32 | 65 | 65 | |||||||||||||||||||
| 9,588 | 9,295 | 18,809 | 18,829 | ||||||||||||||||||||
| Operating income | 970 | 1,011 | 1,674 | 1,724 | |||||||||||||||||||
| Interest expense | (120) | (115) | (247) | (231) | |||||||||||||||||||
| Interest income | 37 | 28 | 78 | 51 | |||||||||||||||||||
| Gain on sale of business | 293 | — | 293 | — | |||||||||||||||||||
| Other income (expense), net | 13 | (7) | 18 | (2) | |||||||||||||||||||
| Income from continuing operations before equity investments and income taxes | 1,193 | 917 | 1,816 | 1,542 | |||||||||||||||||||
| (Loss) income from equity investments | (19) | (12) | (46) | 5 | |||||||||||||||||||
| Income from continuing operations before income taxes | 1,174 | 905 | 1,770 | 1,547 | |||||||||||||||||||
| Provision for income taxes | 249 | 188 | 371 | 355 | |||||||||||||||||||
| Income from continuing operations | 925 | 717 | 1,399 | 1,192 | |||||||||||||||||||
| Loss from discontinued operations, net of tax | (1) | (2) | (2) | (3) | |||||||||||||||||||
| Net income | 924 | 715 | 1,397 | 1,189 | |||||||||||||||||||
| Dividends on redeemable non-controlling interests | (1) | (1) | (3) | (3) | |||||||||||||||||||
| Net income attributable to the Company shareholders | $ | 923 | $ | 714 | $ | 1,394 | $ | 1,186 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Net income (loss) attributable to the Company shareholders — | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Continuing operations | $ | 2.82 | $ | 2.19 | $ | 4.27 | $ | 3.64 | |||||||||||||||
| Discontinued operations | — | (0.01) | (0.01) | (0.01) | |||||||||||||||||||
| $ | 2.82 | $ | 2.18 | $ | 4.26 | $ | 3.63 | ||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Continuing operations | $ | 2.82 | $ | 2.19 | $ | 4.26 | $ | 3.63 | |||||||||||||||
| Discontinued operations | — | (0.01) | (0.01) | (0.01) | |||||||||||||||||||
| $ | 2.82 | $ | 2.18 | $ | 4.25 | $ | 3.62 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net income | $ | 924 | $ | 715 | $ | 1,397 | $ | 1,189 | |||||||||||||||
| Other comprehensive income (loss), net of tax – | |||||||||||||||||||||||
| Financial derivatives | 49 | 3 | 50 | 7 | |||||||||||||||||||
| Defined benefit pension and other postretirement benefit plans | 4 | 2 | 7 | 4 | |||||||||||||||||||
| Foreign currency translations | (44) | (31) | (104) | 28 | |||||||||||||||||||
| Total other comprehensive income (loss), net of tax | 9 | (26) | (47) | 39 | |||||||||||||||||||
| Comprehensive income | 933 | 689 | 1,350 | 1,228 | |||||||||||||||||||
| Dividends on redeemable non-controlling interests | (1) | (1) | (3) | (3) | |||||||||||||||||||
| Comprehensive income attributable to the Company shareholders | $ | 932 | $ | 688 | $ | 1,347 | $ | 1,225 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars | June 30, 2024 | December 31, 2023 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,839 | $ | 3,390 | |||||||
| Restricted cash | 25 | 15 | |||||||||
| Accounts receivable: | |||||||||||
| Trade, net | 3,855 | 3,356 | |||||||||
| Related parties | 207 | 151 | |||||||||
| Inventories | 5,073 | 4,765 | |||||||||
| Prepaid expenses and other current assets | 912 | 1,475 | |||||||||
| Total current assets | 12,911 | 13,152 | |||||||||
| Operating lease assets | 1,460 | 1,529 | |||||||||
| Property, plant and equipment | 25,082 | 24,906 | |||||||||
| Less: Accumulated depreciation | (9,508) | (9,359) | |||||||||
| Property, plant and equipment, net | 15,574 | 15,547 | |||||||||
| Equity investments | 4,290 | 3,907 | |||||||||
| Goodwill | 1,603 | 1,647 | |||||||||
| Intangible assets, net | 615 | 641 | |||||||||
| Other assets | 611 | 577 | |||||||||
| Total assets | $ | 37,064 | $ | 37,000 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED BALANCE SHEETS
| Millions of dollars, except shares and par value data | June 30, 2024 | December 31, 2023 | |||||||||
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of long-term debt | $ | 7 | $ | 782 | |||||||
| Short-term debt | 166 | 117 | |||||||||
| Accounts payable: | |||||||||||
| Trade | 3,557 | 3,354 | |||||||||
| Related parties | 517 | 461 | |||||||||
| Accrued and other current liabilities | 1,900 | 2,436 | |||||||||
| Total current liabilities | 6,147 | 7,150 | |||||||||
| Long-term debt | 11,017 | 10,333 | |||||||||
| Operating lease liabilities | 1,363 | 1,409 | |||||||||
| Other liabilities | 2,113 | 2,164 | |||||||||
| Deferred income taxes | 2,847 | 2,886 | |||||||||
| Commitments and contingencies | |||||||||||
| Redeemable non-controlling interests | 114 | 114 | |||||||||
| Shareholders’ equity: | |||||||||||
| Ordinary shares, €0.04 par value, 1,275 million shares authorized, 325,078,684 and 324,483,402 shares outstanding, respectively | 19 | 19 | |||||||||
| Additional paid-in capital | 6,122 | 6,145 | |||||||||
| Retained earnings | 10,233 | 9,692 | |||||||||
| Accumulated other comprehensive loss | (1,523) | (1,476) | |||||||||
| Treasury stock, at cost, 15,343,814 and 15,939,096 ordinary shares, respectively | (1,402) | (1,450) | |||||||||
| Total Company share of shareholders’ equity | 13,449 | 12,930 | |||||||||
| Non-controlling interests | 14 | 14 | |||||||||
| Total equity | 13,463 | 12,944 | |||||||||
| Total liabilities, redeemable non-controlling interests and equity | $ | 37,064 | $ | 37,000 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | |||||||||||
| Millions of dollars | 2024 | 2023 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 1,397 | $ | 1,189 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 752 | 787 | |||||||||
| Impairments | — | 252 | |||||||||
| Amortization of debt-related costs | 5 | 4 | |||||||||
| Share-based compensation | 53 | 48 | |||||||||
| Equity investments— | |||||||||||
| Equity loss (income) | 46 | (5) | |||||||||
| Distributions of earnings, net of tax | 40 | 50 | |||||||||
| Deferred income tax (benefit) provision | (55) | 19 | |||||||||
| Gain on sale of business | (293) | — | |||||||||
| Changes in assets and liabilities that provided (used) cash: | |||||||||||
| Accounts receivable | (604) | (192) | |||||||||
| Inventories | (335) | (349) | |||||||||
| Accounts payable | 373 | (64) | |||||||||
| Other, net | (145) | 33 | |||||||||
| Net cash provided by operating activities | 1,234 | 1,772 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Expenditures for property, plant and equipment | (967) | (653) | |||||||||
| Acquisition of equity method investments | (512) | (2) | |||||||||
| Proceeds from sale of business | 700 | — | |||||||||
| Other, net | (44) | (87) | |||||||||
| Net cash used in investing activities | (823) | (742) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of Company ordinary shares | (75) | (170) | |||||||||
| Dividends paid - common stock | (846) | (797) | |||||||||
| Issuance of long-term debt | 744 | 500 | |||||||||
| Payments of debt issuance costs | (7) | (5) | |||||||||
| Repayment of long-term debt | (775) | — | |||||||||
| Net repayments of commercial paper | — | (200) | |||||||||
| Proceeds from settlement of cash flow hedges | 882 | — | |||||||||
| Payments from settlement of cash flow hedges | (835) | — | |||||||||
| Other, net | 19 | (29) | |||||||||
| Net cash used in financing activities | (893) | (701) | |||||||||
| Effect of exchange rate changes on cash | (59) | 9 | |||||||||
| (Decrease) increase in cash and cash equivalents and restricted cash | (541) | 338 | |||||||||
| Cash and cash equivalents and restricted cash at beginning of period | 3,405 | 2,156 | |||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | 2,864 | $ | 2,494 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | 19 | $ | (1,372) | $ | 6,112 | $ | 9,752 | $ | (1,532) | $ | 12,979 | $ | 14 | |||||||||||||||||||||||||||
| Net income | — | — | — | 924 | — | 924 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 9 | 9 | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 45 | 10 | (4) | — | 51 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($1.34 per share) | — | — | — | (438) | — | (438) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($15.00 per share) | — | — | — | (1) | — | (1) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (75) | — | — | — | (75) | — | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | 19 | $ | (1,402) | $ | 6,122 | $ | 10,233 | $ | (1,523) | $ | 13,449 | $ | 14 | |||||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | 19 | $ | (1,360) | $ | 6,092 | $ | 9,277 | $ | (1,307) | $ | 12,721 | $ | 14 | |||||||||||||||||||||||||||
| Net income | — | — | — | 715 | — | 715 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (26) | (26) | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 13 | 19 | (3) | — | 29 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($1.25 per share) | — | — | — | (408) | — | (408) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($15.00 per share) | — | — | — | (1) | — | (1) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (99) | — | — | — | (99) | — | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | 19 | $ | (1,446) | $ | 6,111 | $ | 9,580 | $ | (1,333) | $ | 12,931 | $ | 14 | |||||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | 19 | $ | (1,450) | $ | 6,145 | $ | 9,692 | $ | (1,476) | $ | 12,930 | $ | 14 | |||||||||||||||||||||||||||
| Net income | — | — | — | 1,397 | — | 1,397 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (47) | (47) | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 123 | (23) | (7) | — | 93 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($2.59 per share) | — | — | — | (846) | — | (846) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($30.00 per share) | — | — | — | (3) | — | (3) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (75) | — | — | — | (75) | — | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | 19 | $ | (1,402) | $ | 6,122 | $ | 10,233 | $ | (1,523) | $ | 13,449 | $ | 14 |
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Company Share of Shareholders’ Equity | Non- Controlling Interests | ||||||||||||||||||||||||||||||||||||
| Millions of dollars | Issued | Treasury | |||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | 19 | $ | (1,346) | $ | 6,119 | $ | 9,195 | $ | (1,372) | $ | 12,615 | $ | 14 | |||||||||||||||||||||||||||
| Net income | — | — | — | 1,189 | — | 1,189 | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 39 | 39 | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 73 | (8) | (4) | — | 61 | — | ||||||||||||||||||||||||||||||||||
| Dividends - common stock ($2.44 per share) | — | — | — | (797) | — | (797) | — | ||||||||||||||||||||||||||||||||||
| Dividends - redeemable non-controlling interests ($30.00 per share) | — | — | — | (3) | — | (3) | — | ||||||||||||||||||||||||||||||||||
| Repurchases of Company ordinary shares | — | (173) | — | — | — | (173) | — | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | 19 | $ | (1,446) | $ | 6,111 | $ | 9,580 | $ | (1,333) | $ | 12,931 | $ | 14 |
See Notes to the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
LyondellBasell Industries N.V. is a limited liability company (Naamloze Vennootschap) incorporated under Dutch law by deed of incorporation dated October 15, 2009. 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.”). LyondellBasell N.V. is a worldwide manufacturer of chemicals and polymers, a refiner of crude oil, a producer of gasoline blending components and a developer and licensor of technologies for the production of polymers.
The accompanying unaudited Consolidated Financial Statements have been prepared from the books and records of LyondellBasell N.V. in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain notes and other information have been condensed or omitted from the interim financial statements included in this report. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement have been included. These statements contain some amounts that are based upon management estimates and judgments. Future actual results could differ from such current estimates. The results for interim periods are not necessarily indicative of results for the entire year.
2. Accounting and Reporting Changes
Recently Adopted Guidance
There were no new Accounting Standard Updates (“ASU”) adopted in the six months ended June 30, 2024 that had a material impact on the Consolidated Financial Statements.
Accounting Guidance Issued But Not Adopted as of June 30, 2024
Segment Disclosures—In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance improves the disclosures about a public entity’s reportable segments and addresses requests from investors for additional detailed information about a reportable segment’s expenses. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently assessing the impact of adopting the new guidance on the Consolidated Financial Statements.
Income Tax Disclosures—In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 74): Improvements to Income Tax Disclosures. The guidance requires companies to disclose certain specific categories in the rate reconciliation and provide additional information for reconciling items that meet the quantitative threshold of 5% of the expected tax using the applicable statutory income tax rate. There is also a required disclosure to provide the net income taxes paid or received disaggregated by federal, state, and foreign taxes with jurisdictions to be separately disclosed if the jurisdiction is 5% or more of the total net income taxes paid or received. The guidance is effective for annual periods beginning after December 15, 2024. Earlier adoption is permitted. We are currently assessing the impact of adopting the new guidance on the Consolidated Financial Statements.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
3. Revenues
*Contract Balances—*Contract liabilities were $131 million and $175 million at June 30, 2024 and December 31, 2023, respectively. Revenue recognized in each reporting period that was included in the contract liability balance at the beginning of the period was immaterial.
*Disaggregation of Revenues—*The following table presents our revenues disaggregated by key products:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| Olefins and co-products | $ | 1,000 | $ | 907 | $ | 1,908 | $ | 1,790 | |||||||||||||||
| Polyethylene | 1,942 | 1,920 | 3,840 | 3,936 | |||||||||||||||||||
| Polypropylene | 1,577 | 1,453 | 3,075 | 2,979 | |||||||||||||||||||
| Propylene oxide and derivatives | 630 | 538 | 1,232 | 1,179 | |||||||||||||||||||
| Oxyfuels and related products | 1,431 | 1,302 | 2,541 | 2,535 | |||||||||||||||||||
| Intermediate chemicals | 667 | 766 | 1,456 | 1,512 | |||||||||||||||||||
| Compounding and solutions | 943 | 956 | 1,903 | 1,951 | |||||||||||||||||||
| Refined products | 2,197 | 2,293 | 4,155 | 4,350 | |||||||||||||||||||
| Other | 171 | 171 | 373 | 321 | |||||||||||||||||||
| Total | $ | 10,558 | $ | 10,306 | $ | 20,483 | $ | 20,553 |
The following table presents our revenues disaggregated by geography, based upon the location of the customer:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||
| United States | $ | 5,029 | $ | 5,032 | $ | 9,817 | $ | 9,884 | |||||||||||||||
| Germany | 663 | 619 | 1,323 | 1,405 | |||||||||||||||||||
| China | 535 | 533 | 1,141 | 1,047 | |||||||||||||||||||
| Mexico | 460 | 389 | 896 | 819 | |||||||||||||||||||
| Italy | 393 | 346 | 794 | 722 | |||||||||||||||||||
| Japan | 360 | 426 | 594 | 791 | |||||||||||||||||||
| France | 301 | 272 | 558 | 566 | |||||||||||||||||||
| Poland | 247 | 223 | 489 | 462 | |||||||||||||||||||
| The Netherlands | 214 | 240 | 399 | 473 | |||||||||||||||||||
| Other | 2,356 | 2,226 | 4,472 | 4,384 | |||||||||||||||||||
| Total | $ | 10,558 | $ | 10,306 | $ | 20,483 | $ | 20,553 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
4. Accounts Receivable
Accounts receivable are reflected in the Consolidated Balance Sheets, net of allowance for credit losses of $5 million and $6 million as of June 30, 2024 and December 31, 2023, respectively.
5. Inventories
Inventories consisted of the following components:
| Millions of dollars | June 30, 2024 | December 31, 2023 | |||||||||
| Finished goods | $ | 3,317 | $ | 3,134 | |||||||
| Work-in-process | 180 | 182 | |||||||||
| Raw materials and supplies | 1,576 | 1,449 | |||||||||
| Total inventories | $ | 5,073 | $ | 4,765 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
6. Debt
Long-term loans, notes and other debt, net of unamortized discount, debt issuance cost and cumulative fair value hedging adjustments, consisted of the following:
| Millions of dollars | June 30, 2024 | December 31, 2023 | |||||||||
| Senior Notes due 2024, $1,000 million, 5.75% | $ | — | $ | 775 | |||||||
| Senior Notes due 2055, $1,000 million, 4.625% ($15 million of discount; $10 million of debt issuance cost) | 975 | 975 | |||||||||
| Guaranteed Notes due 2027, $300 million, 8.1% | 300 | 300 | |||||||||
| Issued by LYB International Finance B.V.: | |||||||||||
| Guaranteed Notes due 2043, $750 million, 5.25% ($18 million of discount; $6 million of debt issuance cost) | 726 | 726 | |||||||||
| Guaranteed Notes due 2044, $1,000 million, 4.875% ($10 million of discount; $8 million of debt issuance cost) | 982 | 982 | |||||||||
| Issued by LYB International Finance II B.V.: | |||||||||||
| Guaranteed Notes due 2026, €500 million, 0.875% ($1 million of discount; $1 million of debt issuance cost) | 525 | 542 | |||||||||
| Guaranteed Notes due 2027, $1,000 million, 3.5% ($2 million of discount; $2 million of debt issuance cost) | 581 | 585 | |||||||||
| Guaranteed Notes due 2031, €500 million, 1.625% ($4 million of discount; $2 million of debt issuance cost) | 524 | 542 | |||||||||
| Issued by LYB International Finance III LLC: | |||||||||||
| Guaranteed Notes due 2025, $500 million, 1.25% ($1 million of debt issuance cost) | 483 | 481 | |||||||||
| Guaranteed Notes due 2030, $500 million, 3.375% ($1 million of debt issuance cost) | 121 | 124 | |||||||||
| Guaranteed Notes due 2030, $500 million, 2.25% ($2 million of discount; $3 million of debt issuance cost) | 472 | 474 | |||||||||
| Guaranteed Notes due 2033, $500 million, 5.625% ($5 million of debt issuance cost) | 495 | 495 | |||||||||
| Guaranteed Notes due 2034, $750 million, 5.5% ($6 million of discount, $7 million of debt issuance cost) | 737 | — | |||||||||
| Guaranteed Notes due 2040, $750 million, 3.375% ($1 million of discount; $7 million of debt issuance cost) | 742 | 742 | |||||||||
| Guaranteed Notes due 2049, $1,000 million, 4.2% ($14 million of discount; $10 million of debt issuance cost) | 976 | 976 | |||||||||
| Guaranteed Notes due 2050, $1,000 million, 4.2% ($6 million of discount; $10 million of debt issuance cost) | 978 | 975 | |||||||||
| Guaranteed Notes due 2051, $1,000 million, 3.625% ($2 million of discount; $10 million of debt issuance cost) | 906 | 916 | |||||||||
| Guaranteed Notes due 2060, $500 million, 3.8% ($4 million of discount; $6 million of debt issuance cost) | 480 | 483 | |||||||||
| Other | 21 | 22 | |||||||||
| Total | 11,024 | 11,115 | |||||||||
| Less current maturities | (7) | (782) | |||||||||
| Long-term debt | $ | 11,017 | $ | 10,333 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Fair value hedging adjustments associated with the fair value hedge accounting of our fixed-for-floating interest rate swaps for the applicable periods are as follows:
| Gains (Losses) | Cumulative Fair Value Hedging Adjustments Included in Carrying Amount of Debt | |||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | June 30, | December 31, | |||||||||||||||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2025, 1.25% | $ | (1) | $ | 1 | $ | (1) | $ | (1) | $ | 8 | $ | 9 | ||||||||||||||||||||||||||
| Guaranteed Notes due 2026, 0.875% | — | — | — | (1) | 8 | 8 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2027, 3.5% | — | 6 | 4 | 3 | 6 | 2 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2030, 3.375% | — | 4 | 3 | — | 20 | 17 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2030, 2.25% | — | 2 | 3 | (1) | 23 | 20 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2031, 1.625% | 1 | 1 | 2 | (1) | 5 | 3 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2050, 4.2% | (1) | 1 | (3) | (1) | 6 | 9 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2051, 3.625% | (1) | 19 | 10 | 2 | 82 | 72 | ||||||||||||||||||||||||||||||||
| Guaranteed Notes due 2060, 3.8% | — | 4 | 3 | 1 | 10 | 7 | ||||||||||||||||||||||||||||||||
| Total | $ | (2) | $ | 38 | $ | 21 | $ | 1 | $ | 168 | $ | 147 |
Fair value adjustments are recognized in Interest expense in the Consolidated Statements of Income.
Long-Term Debt
Senior Revolving Credit Facility—Our $3,250 million senior unsecured revolving credit facility (the “Senior Revolving Credit Facility”), may be used for dollar and euro denominated borrowings. The facility also supports our commercial paper program, has a $200 million sub-limit for dollar and euro denominated letters of credit and a $1,000 million uncommitted accordion feature. Borrowings under the facility bear interest at either a base rate, secured overnight financing rate (“SOFR”) or EURIBOR rate, plus an applicable margin. Additional fees are incurred for the average daily unused commitments. At June 30, 2024, we had no borrowings or letters of credit outstanding and $3,250 million of unused availability under this facility.
In July 2024, we amended our credit agreement to increase our senior unsecured revolving credit facility from $3,250 million to $3,750 million and extend the maturity to July 2029.
Guaranteed Notes due 2034—In February 2024, LYB International Finance III, LLC (“LYB Finance III”), a wholly owned finance subsidiary of LyondellBasell Industries N.V., issued $750 million of 5.5% guaranteed notes due 2034 (the “2034 Notes”) at a discounted price of 99.2%. Net proceeds after deducting original issuance discounts, underwriting fees and offering expenses totaled $737 million. We used the net proceeds from the sale of the 2034 Notes to repay our 5.75% senior notes due 2024 as discussed further below.
These unsecured notes, which are fully and unconditionally guaranteed by LyondellBasell Industries N.V., rank equally in right of payment to all of LYB Finance III’s and LyondellBasell Industries N.V.’s existing and future senior unsecured indebtedness and will rank senior in right of payment to any future subordinated indebtedness that LYB Finance III or LyondellBasell Industries N.V. incurs. There are no significant restrictions that would impede LyondellBasell Industries N.V., as guarantor, from obtaining funds by dividend or loan from its subsidiaries.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
The indenture governing these notes contains limited covenants, including those restricting our ability, and the ability of our subsidiaries, to incur indebtedness secured by significant property or by capital stock of subsidiaries that own significant property, enter into certain sale and lease-back transactions with respect to any significant property or enter into consolidations, mergers or sales of all or substantially all of our assets.
The 2034 Notes may be redeemed at any time in whole, or from time to time in part, prior to the scheduled maturity date, at a redemption price equal to the greater of (i) the sum of the present values of the remaining scheduled payments of principal and interest (discounted at the treasury rate plus the applicable basis points) less interest accrued on the notes to be redeemed, and (ii) 100% of the principal amount of the notes redeemed; plus, in either case, accrued and unpaid interest thereon to, but excluding, the redemption date. The 2034 Notes may also be redeemed at any time, on or after the date that is three months prior to the scheduled maturity date of the notes at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date. The notes are also redeemable upon certain tax events.
Senior Notes due 2024—In March 2024, we repaid the $775 million remaining outstanding principal of our 5.75% senior notes due 2024.
Short-Term Debt
U.S. Receivables Facility—Our U.S. Receivables Facility has a purchase limit of $900 million in addition to a $300 million uncommitted accordion feature. In May 2024, we extended the term of the facility to June 2025. This facility provides liquidity through the sale or contribution of trade receivables by certain of our U.S. subsidiaries to a wholly owned, bankruptcy-remote subsidiary on an ongoing basis and without recourse. We pay variable interest rates on our secured borrowings. Additional fees are incurred for the average daily unused commitments. This facility also provides for the issuance of letters of credit up to $200 million. At June 30, 2024, we had no borrowings or letters of credit outstanding and $900 million unused availability under this facility.
Commercial Paper Program—We have a commercial paper program under which we may issue up to $2,500 million of privately placed, unsecured, short-term promissory notes (“commercial paper”). At June 30, 2024, we had no borrowings of outstanding commercial paper.
Precious Metal Financings—At June 30, 2024 and December 31, 2023, we had $165 million and $117 million, respectively, of Short-term debt related to our precious metal financings.
Weighted Average Interest Rate—At June 30, 2024 and December 31, 2023, our weighted average interest rates on outstanding Short-term debt were 1.3% and 1.9%, respectively.
Additional Information
Debt Compliance—As of June 30, 2024, we are in compliance with our debt covenants.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
7. Financial Instruments and Fair Value Measurements
We are exposed to market risks, such as changes in commodity pricing, interest rates and currency exchange rates. To manage the volatility related to these exposures, we selectively enter into derivative contracts pursuant to our risk management policies.
Financial Instruments Measured at Fair Value on a Recurring Basis—The following table summarizes financial instruments outstanding for the periods presented that are measured at fair value on a recurring basis:
| Fair Value | |||||||||||||||||||||||||||||
| Millions of dollars | June 30, 2024 | December 31, 2023 | Balance Sheet Classification | ||||||||||||||||||||||||||
| Assets– | |||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | $ | 2 | $ | 1 | Prepaid expenses and other current assets | ||||||||||||||||||||||||
| Commodities | 1 | — | Other assets | ||||||||||||||||||||||||||
| Foreign currency | 97 | 44 | Prepaid expenses and other current assets | ||||||||||||||||||||||||||
| Foreign currency | 71 | 45 | Other assets | ||||||||||||||||||||||||||
| Interest rates | 18 | 38 | Prepaid expenses and other current assets | ||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | 56 | 98 | Prepaid expenses and other current assets | ||||||||||||||||||||||||||
| Foreign currency | 11 | 3 | Prepaid expenses and other current assets | ||||||||||||||||||||||||||
| Total | $ | 256 | $ | 229 | |||||||||||||||||||||||||
| Liabilities– | |||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | $ | 67 | $ | 109 | Accrued and other current liabilities | ||||||||||||||||||||||||
| Commodities | 19 | 33 | Other liabilities | ||||||||||||||||||||||||||
| Foreign currency | 9 | 40 | Accrued and other current liabilities | ||||||||||||||||||||||||||
| Foreign currency | 9 | 32 | Other liabilities | ||||||||||||||||||||||||||
| Interest rates | 38 | 31 | Accrued and other current liabilities | ||||||||||||||||||||||||||
| Interest rates | 184 | 172 | Other liabilities | ||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||
| Commodities | 30 | 52 | Accrued and other current liabilities | ||||||||||||||||||||||||||
| Foreign currency | 1 | 10 | Accrued and other current liabilities | ||||||||||||||||||||||||||
| Total | $ | 357 | $ | 479 |
The financial instruments in the table above are classified as Level 2. We present the gross assets and liabilities of our derivative financial instruments on the Consolidated Balance Sheets.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Financial Instruments Not Measured at Fair Value on a Recurring Basis—The following table presents the carrying value and estimated fair value of our short-term precious metal financings and long-term debt:
| June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Millions of dollars | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||
| Precious metal financings | $ | 165 | $ | 167 | $ | 117 | $ | 114 | |||||||||||||||
| Long-term debt | 11,004 | 9,582 | 10,316 | 9,225 | |||||||||||||||||||
| Total | $ | 11,169 | $ | 9,749 | $ | 10,433 | $ | 9,339 |
The financial instruments in the table above are classified as Level 2. Our other financial instruments classified within Current assets and Current liabilities have a short maturity and their carrying value approximates fair value.
Derivative Instruments:
Commodity Prices—The following table presents the notional amounts of our outstanding commodity derivative instruments:
| Notional Amount | Unit of Measure | Maturity Date | |||||||||||||||||||||
| Millions of units | June 30, 2024 | December 31, 2023 | |||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||
| Natural gas | 72 | 72 | MMBtu | 2024 to 2027 | |||||||||||||||||||
| Ethane | 16 | 18 | Bbls | 2024 to 2026 | |||||||||||||||||||
| Power | 1 | 1 | MWhs | 2024 to 2027 | |||||||||||||||||||
| Refined products | — | 1 | Bbls | 2024 | |||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||
| Crude oil | 6 | 12 | Bbls | 2024 | |||||||||||||||||||
| Refined products | 16 | 16 | Bbls | 2024 to 2025 | |||||||||||||||||||
| Precious metals | 1 | 1 | Troy Ounces | 2024 to 2025 | |||||||||||||||||||
| Renewable Identification Numbers | 29 | 59 | RINs | 2024 |
Interest Rates—The following table presents the notional amounts of our outstanding interest rate derivative instruments:
| Notional Amount | |||||||||||||||||||||||||||||
| Millions of dollars | June 30, 2024 | December 31, 2023 | Maturity Date | ||||||||||||||||||||||||||
| Cash flow hedges | $ | — | $ | 200 | 2024 | ||||||||||||||||||||||||
| Fair value hedges | 2,164 | 2,171 | 2025 to 2031 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Foreign Currency Rates—The following table presents the notional amounts of our outstanding foreign currency derivative instruments:
| Notional Amount | ||||||||||||||||||||
| Millions of dollars | June 30, 2024 | December 31, 2023 | Maturity Date | |||||||||||||||||
| Net investment hedges | $ | 3,289 | $ | 3,289 | 2024 to 2030 | |||||||||||||||
| Cash flow hedges | 300 | 1,150 | 2027 | |||||||||||||||||
| Not designated | 1,207 | 555 | 2024 to 2025 | |||||||||||||||||
Impact on Earnings and Other Comprehensive Income—The following tables summarize the pre-tax effect of derivative instruments recorded in Accumulated other comprehensive income (“AOCI”), the gains (losses) reclassified from AOCI to earnings and additional gains (losses) recognized directly in earnings:
| Effects of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| Balance Sheet | Income Statement | ||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified to Income from AOCI | Additional Gain (Loss) Recognized in Income | Income Statement | ||||||||||||||||||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | Classification | ||||||||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | $ | (1) | $ | — | $ | 1 | $ | — | $ | — | $ | — | Sales and other operating revenues | ||||||||||||||||||||||||||||
| Commodities | 31 | (3) | 35 | — | — | — | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | 25 | (8) | 1 | (6) | 14 | 24 | Interest expense | ||||||||||||||||||||||||||||||||||
| Interest rates | — | 12 | 1 | 2 | (17) | (53) | Interest expense | ||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 16 | (1) | Sales and other operating revenues | ||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 2 | — | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | 16 | (13) | Other income (expense), net | ||||||||||||||||||||||||||||||||||
| Total | $ | 55 | $ | 1 | $ | 38 | $ | (4) | $ | 31 | $ | (43) |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Effects of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| Balance Sheet | Income Statement | ||||||||||||||||||||||||||||||||||||||||
| Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified to Income from AOCI | Additional Gain (Loss) Recognized in Income | Income Statement | ||||||||||||||||||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | Classification | ||||||||||||||||||||||||||||||||||
| Derivatives designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | $ | (3) | $ | — | $ | 2 | $ | — | $ | — | $ | — | Sales and other operating revenues | ||||||||||||||||||||||||||||
| Commodities | (17) | (8) | 73 | 19 | — | — | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | 120 | (63) | (27) | 14 | 35 | 38 | Interest expense | ||||||||||||||||||||||||||||||||||
| Interest rates | 11 | (2) | 2 | 3 | (61) | (30) | Interest expense | ||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedges: | |||||||||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | (69) | (34) | Sales and other operating revenues | ||||||||||||||||||||||||||||||||||
| Commodities | — | — | — | — | 77 | 27 | Cost of sales | ||||||||||||||||||||||||||||||||||
| Foreign currency | — | — | — | — | 24 | (24) | Other income (expense), net | ||||||||||||||||||||||||||||||||||
| Total | $ | 111 | $ | (73) | $ | 50 | $ | 36 | $ | 6 | $ | (23) | |||||||||||||||||||||||||||||
As of June 30, 2024, on a pre-tax basis, $4 million is scheduled to be reclassified from Accumulated other comprehensive loss as an increase to Interest expense over the next twelve months.
Other Financial Instruments:
Cash and Cash Equivalents—At June 30, 2024 and December 31, 2023, we had marketable securities classified as Cash and cash equivalents of $1,876 million and $2,432 million, respectively.
8. Income Taxes
For interim tax reporting, we estimate an annual effective tax rate which is applied to the year-to-date ordinary income. Tax effects of significant, unusual, or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur. Our effective income tax rate fluctuates based on, among other factors, changes in pre-tax income in countries with varying statutory tax rates, changes in valuation allowances, changes in foreign exchange gains or losses, the amount of exempt income, changes in unrecognized tax benefits associated with uncertain tax positions and changes in tax laws.
Our exempt income primarily includes interest income, export incentives, and equity earnings of joint ventures. Interest income earned by certain of our subsidiaries through intercompany financings is taxed at rates substantially lower than the U.S. statutory rate. Export incentives relate to tax benefits derived from elections and structures available for U.S. exports. Equity earnings attributable to the earnings of our joint ventures, when paid through dividends to certain European subsidiaries, are exempt from all or portions of normal statutory income tax rates. We currently anticipate the favorable treatment for interest income, dividends, and export incentives to continue in the near term; however, this treatment is based on current law. The United Kingdom, as well as certain other jurisdictions in which we operate, enacted legislation implementing the Organization for Economic Cooperation and Development’s Pillar Two Model Rules effective as of January 1, 2024. We do not expect the impact to the Consolidated Financial Statements to be material based on the legislation enacted at this stage.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Our effective income tax rate for the second quarter of 2024 was 21.2% compared to 20.8% for the second quarter of 2023. The higher effective tax rate for the second quarter of 2024 was primarily due to a decrease in exempt income of 4.1% and the impact of changes in pre-tax income in countries with varying statutory tax rates of 1.1%. These increases were offset by a 4.8% decrease in our effective income tax rate due to an audit settlement that occurred during the second quarter of 2023.
Our effective income tax rate for the first six months of 2024 was 21.0% compared to 22.9% for the first six months of 2023. The lower effective tax rate for the first six months of 2024 was primarily due to the first quarter 2023 goodwill impairment, for which there was no tax benefit, of 2.8%, an audit settlement during the second quarter 2023 of 2.4%, and changes in foreign exchange gains or losses of 1.0%. These decreases were partially offset by a 4.1% increase in our effective income tax rate due to a decrease in exempt income.
9. Commitments and Contingencies
Commitments—We have various purchase commitments for materials, supplies and services incidental to the ordinary conduct of business, generally for quantities required for our businesses and at prevailing market prices. These commitments are designed to ensure sources of supply and are not expected to be in excess of normal requirements. Additionally, we have capital expenditure commitments, which we incur in our normal course of business.
Financial Assurance Instruments—We have obtained letters of credit, performance and surety bonds and have issued financial and performance guarantees to support trade payables, potential liabilities and other obligations. Considering the frequency of claims made against the financial instruments we use to support our obligations, and the magnitude of those financial instruments in light of our current financial position, management does not expect that any claims against or draws on these instruments would have a material adverse effect on the Consolidated Financial Statements. We have not experienced any unmanageable difficulties in obtaining the required financial assurance instruments for our current operations.
Environmental Remediation—Accrued liabilities for future environmental remediation costs at current and former plant sites and other remediation sites totaled $142 million and $124 million as of June 30, 2024 and December 31, 2023, respectively. At June 30, 2024, the accrued liabilities for individual sites range from less than $1 million to $42 million. The remediation expenditures are expected to occur over a number of years and are not concentrated in any single year. In our opinion, it is reasonably possible that losses in excess of the liabilities recorded may have been incurred. However, we cannot estimate any amount or range of such possible additional losses. New information about sites, new technology or future developments, such as involvement in investigations by regulatory agencies, could require us to reassess our potential exposure related to environmental matters.
Indemnification—We are parties to various indemnification arrangements, including arrangements entered into in connection with acquisitions, divestitures and the formation and dissolution of joint ventures. Pursuant to these arrangements, we provide indemnification to and/or receive indemnification from other parties in connection with liabilities that may arise in connection with the transactions and in connection with activities prior to completion of the transactions. These indemnification arrangements typically include provisions pertaining to third-party claims relating to environmental and tax matters and various types of litigation. As of June 30, 2024, we had not accrued any significant amounts for our indemnification obligations, and we are not aware of other circumstances that would likely lead to significant future indemnification obligations. We cannot determine with certainty the potential amount of future payments under the indemnification arrangements until events arise that would trigger a liability under the arrangements.
As part of our technology licensing contracts, we give indemnifications to our licensees for liabilities arising from possible patent infringement claims with respect to certain proprietary licensed technologies. Such indemnifications have a stated maximum amount and generally cover a period of 5 to 10 years.
*Legal Proceedings—*We are subject to various lawsuits and claims, including but not limited to, matters involving contract disputes, environmental damages, personal injury and property damage. We vigorously defend ourselves and prosecute these matters as appropriate.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Our legal organization applies its knowledge, experience and professional judgment to the specific characteristics of our cases, employing a litigation management process to manage and monitor legal proceedings in which we are a party. Our process facilitates the early evaluation and quantification of potential exposures in individual cases. This process also enables us to track those cases that have been scheduled for trial, mediation or other resolution. We regularly assess the adequacy of legal accruals based on our professional judgment, experience and the information available regarding our cases.
Based on consideration of all relevant facts and circumstances, we do not believe the ultimate outcome of any currently pending lawsuit against us will have a material adverse effect upon our operations, financial condition or Consolidated Financial Statements.
10. Shareholders’ Equity and Redeemable Non-controlling Interests
Shareholders’ Equity
Dividend Distributions—The following table summarizes the quarterly dividends paid in the period presented:
| Millions of dollars, except per share amounts | Dividend Per Ordinary Share | Aggregate Dividends Paid | Date of Record | ||||||||||||||
| March 2024 | $ | 1.25 | $ | 408 | March 4, 2024 | ||||||||||||
| June 2024 | 1.34 | 438 | June 3, 2024 | ||||||||||||||
| $ | 2.59 | $ | 846 |
Share Repurchase Authorization—In May 2024, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares, through November 24, 2025 (“2024 Share Repurchase Authorization”), which superseded any prior repurchase authorizations. The timing and amount of these repurchases, which are determined based on our evaluation of market conditions and other factors, may be executed from time to time through open market or privately negotiated transactions. The repurchased shares, which are recorded at cost, are classified as Treasury stock and may be retired or used for general corporate purposes, including for various employee benefit and compensation plans.
The following table summarizes our share repurchase activity for the periods presented:
| Millions of dollars, except shares and per share amounts | Shares Repurchased | Average Purchase Price | Total Purchase Price, Including Commissions and Fees | |||||||||||||||||
| For the six months ended June 30, 2024: | ||||||||||||||||||||
| 2024 Share Repurchase Authorization | 784,505 | $ | 95.62 | $ | 75 | |||||||||||||||
| For the six months ended June 30, 2023: | ||||||||||||||||||||
| 2022 Share Repurchase Authorization | 1,365,898 | $ | 88.98 | $ | 122 | |||||||||||||||
| 2023 Share Repurchase Authorization | 576,044 | 89.34 | 51 | |||||||||||||||||
| 1,941,942 | $ | 89.09 | $ | 173 |
Total cash paid for share repurchases for the six months ended June 30, 2024 and 2023 was $75 million and $170 million, respectively. Cash payments made during the reporting period may differ from the total purchase price, including commissions and fees, due to the timing of payments.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Ordinary Shares—The changes in the outstanding amounts of ordinary shares are as follows:
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Ordinary shares outstanding: | |||||||||||
| Beginning balance | 324,483,402 | 325,723,567 | |||||||||
| Share-based compensation | 1,203,741 | 571,224 | |||||||||
| Employee stock purchase plan | 176,046 | 163,234 | |||||||||
| Purchase of ordinary shares | (784,505) | (1,941,942) | |||||||||
| Ending balance | 325,078,684 | 324,516,083 |
*Treasury Shares—*The changes in the amounts of treasury shares held by the Company are as follows:
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Ordinary shares held as treasury shares: | |||||||||||
| Beginning balance | 15,939,096 | 14,698,931 | |||||||||
| Share-based compensation | (1,203,741) | (571,224) | |||||||||
| Employee stock purchase plan | (176,046) | (163,234) | |||||||||
| Purchase of ordinary shares | 784,505 | 1,941,942 | |||||||||
| Ending balance | 15,343,814 | 15,906,415 |
Accumulated Other Comprehensive Loss—The components of, and after-tax changes in, Accumulated other comprehensive loss as of and for the six months ended June 30, 2024 and 2023 are presented in the following tables:
| Millions of dollars | Financial Derivatives | Defined Benefit Pension and Other Postretirement Benefit Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||||||||||||||
| Balance – December 31, 2023 | $ | (226) | $ | (279) | $ | (971) | $ | (1,476) | |||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 17 | — | (79) | (62) | |||||||||||||||||||||||||||||||
| Tax expense before reclassifications | (5) | — | (25) | (30) | |||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | 50 | 8 | — | 58 | |||||||||||||||||||||||||||||||
| Tax expense | (12) | (1) | — | (13) | |||||||||||||||||||||||||||||||
| Net other comprehensive income (loss) | 50 | 7 | (104) | (47) | |||||||||||||||||||||||||||||||
| Balance – June 30, 2024 | $ | (176) | $ | (272) | $ | (1,075) | $ | (1,523) |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Millions of dollars | Financial Derivatives | Defined Benefit Pension and Other Postretirement Benefit Plans | Foreign Currency Translation Adjustments | Total | |||||||||||||||||||||||||||||||
| Balance – December 31, 2022 | $ | (146) | $ | (182) | $ | (1,044) | $ | (1,372) | |||||||||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | (28) | — | 17 | (11) | |||||||||||||||||||||||||||||||
| Tax benefit before reclassifications | 8 | — | 11 | 19 | |||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | 36 | 5 | — | 41 | |||||||||||||||||||||||||||||||
| Tax expense | (9) | (1) | — | (10) | |||||||||||||||||||||||||||||||
| Net other comprehensive income | 7 | 4 | 28 | 39 | |||||||||||||||||||||||||||||||
| Balance – June 30, 2023 | $ | (139) | $ | (178) | $ | (1,016) | $ | (1,333) |
The amounts reclassified out of each component of Accumulated other comprehensive loss are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | Affected Line Item on the Consolidated Statements of Income | |||||||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Reclassification adjustments for: | |||||||||||||||||||||||||||||
| Financial derivatives: | |||||||||||||||||||||||||||||
| Commodities | $ | 1 | $ | — | $ | 2 | $ | — | Sales and other operating revenue | ||||||||||||||||||||
| Commodities | 35 | — | 73 | 19 | Cost of sales | ||||||||||||||||||||||||
| Foreign currency | 1 | (6) | (27) | 14 | Interest expense | ||||||||||||||||||||||||
| Interest rates | 1 | 2 | 2 | 3 | Interest expense | ||||||||||||||||||||||||
| Income tax (expense) benefit | (11) | 1 | (12) | (9) | Provision for income taxes | ||||||||||||||||||||||||
| Financial derivatives, net of tax | 27 | (3) | 38 | 27 | |||||||||||||||||||||||||
| Amortization of defined pension items: | |||||||||||||||||||||||||||||
| Actuarial loss | 4 | 1 | 7 | 3 | Other income (expense), net | ||||||||||||||||||||||||
| Prior service cost | — | 1 | 1 | 2 | Other income (expense), net | ||||||||||||||||||||||||
| Income tax expense | — | — | (1) | (1) | Provision for income taxes | ||||||||||||||||||||||||
| Defined pension items, net of tax | 4 | 2 | 7 | 4 | |||||||||||||||||||||||||
| Total reclassifications, before tax | 42 | (2) | 58 | 41 | |||||||||||||||||||||||||
| Income tax (expense) benefit | (11) | 1 | (13) | (10) | Provision for income taxes | ||||||||||||||||||||||||
| Total reclassifications, after tax | $ | 31 | $ | (1) | $ | 45 | $ | 31 | Amount included in net income |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Redeemable Non-controlling Interests
Our redeemable non-controlling interests relate to shares of cumulative perpetual special stock (“redeemable non-controlling interest stock”) issued by a consolidated subsidiary. As of June 30, 2024 and December 31, 2023, we had 113,059 and 113,075 shares of redeemable non-controlling interest stock outstanding, respectively. These shares may be redeemed at any time at the discretion of the holders.
In February and May 2024, we paid cash dividends of $15.00 per share to our redeemable non-controlling interest shareholders of record as of January 15, 2024 and April 15, 2024. These dividends totaled $3 million for each of the six months ended June 30, 2024 and 2023.
11. Per Share Data
Basic earnings per share is based upon the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share includes the effect of certain stock option and other equity-based compensation awards. Our unvested restricted stock units contain non-forfeitable rights to dividend equivalents and are considered participating securities. We compute basic and diluted earnings per share under the two-class method.
Earnings per share data is as follows:
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Millions of dollars | Continuing Operations | Discontinued Operations | Continuing Operations | Discontinued Operations | |||||||||||||||||||
| Net income (loss) | $ | 925 | $ | (1) | $ | 717 | $ | (2) | |||||||||||||||
| Dividends on redeemable non-controlling interests | (1) | — | (1) | — | |||||||||||||||||||
| Net income attributable to participating securities | (5) | — | (4) | — | |||||||||||||||||||
| Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 919 | $ | (1) | $ | 712 | $ | (2) | |||||||||||||||
| Millions of shares, except per share amounts | |||||||||||||||||||||||
| Basic weighted average common stock outstanding | 326 | 326 | 325 | 325 | |||||||||||||||||||
| Effect of dilutive securities | — | — | 1 | 1 | |||||||||||||||||||
| Potential dilutive shares | 326 | 326 | 326 | 326 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 2.82 | $ | — | $ | 2.19 | $ | (0.01) | |||||||||||||||
| Diluted | $ | 2.82 | $ | — | $ | 2.19 | $ | (0.01) | |||||||||||||||
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Millions of dollars | Continuing Operations | Discontinued Operations | Continuing Operations | Discontinued Operations | |||||||||||||||||||
| Net income (loss) | $ | 1,399 | $ | (2) | $ | 1,192 | $ | (3) | |||||||||||||||
| Dividends on redeemable non-controlling interests | (3) | — | (3) | — | |||||||||||||||||||
| Net income attributable to participating securities | (6) | — | (5) | — | |||||||||||||||||||
| Net income (loss) attributable to ordinary shareholders – basic and diluted | $ | 1,390 | $ | (2) | $ | 1,184 | $ | (3) | |||||||||||||||
| Millions of shares, except per share amounts | |||||||||||||||||||||||
| Basic weighted average common stock outstanding | 325 | 325 | 326 | 326 | |||||||||||||||||||
| Effect of dilutive securities | 1 | 1 | 1 | 1 | |||||||||||||||||||
| Potential dilutive shares | 326 | 326 | 327 | 327 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 4.27 | $ | (0.01) | $ | 3.64 | $ | (0.01) | |||||||||||||||
| Diluted | $ | 4.26 | $ | (0.01) | $ | 3.63 | $ | (0.01) | |||||||||||||||
12. Segment and Related Information
Our operations are managed by senior executives who report to our Chief Executive Officer, the chief operating decision maker. Discrete financial information is available for each of the segments, and our Chief Executive Officer uses the operating results of each of the operating segments for performance evaluation and resource allocation.
The activities of each of our segments from which they earn revenues and incur expenses are described below:
-
Olefins and Polyolefins-Americas (“O&P-Americas”). Our O&P-Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.
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Olefins and Polyolefins-Europe, Asia, International (“O&P-EAI”). Our O&P-EAI segment produces and markets olefins and co-products, polyethylene and polypropylene.
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Intermediates and Derivatives (“I&D”). Our I&D segment produces and markets propylene oxide and its derivatives; oxyfuels and related products; and intermediate chemicals such as styrene monomer, acetyls and ethylene glycol.
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Advanced Polymer Solutions (“APS”). Our APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders.
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Refining. Our Refining segment refines heavy, high-sulfur crude oils and other crude oils of varied types and sources available on the U.S. Gulf Coast into refined products, including gasoline and distillates.
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Technology. Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
Our chief operating decision maker uses EBITDA as the primary measure for reviewing profitability of our segments, and therefore, we have presented EBITDA for all segments. We define EBITDA as earnings from continuing operations before interest, income taxes, and depreciation and amortization.
“Other” includes 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 benefit costs other than service costs. Sales between segments are made at prices approximating prevailing market prices.
Summarized financial information concerning reportable segments is shown in the following tables for the periods presented:
| Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 1,871 | $ | 2,659 | $ | 2,751 | $ | 943 | $ | 2,197 | $ | 137 | $ | — | $ | 10,558 | |||||||||||||||||||||||||||||||
| Intersegment | 1,055 | 183 | 44 | 5 | 148 | 22 | (1,457) | — | |||||||||||||||||||||||||||||||||||||||
| 2,926 | 2,842 | 2,795 | 948 | 2,345 | 159 | (1,457) | 10,558 | ||||||||||||||||||||||||||||||||||||||||
| Loss from equity investments | (1) | (16) | (2) | — | — | — | — | (19) | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 670 | 70 | 794 | 40 | (7) | 84 | (7) | 1,644 | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of business | — | — | 293 | — | — | — | — | 293 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 174 | 107 | 150 | 25 | 6 | 20 | 2 | 484 |
| Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 1,756 | $ | 2,535 | $ | 2,629 | $ | 956 | $ | 2,293 | $ | 137 | $ | — | $ | 10,306 | |||||||||||||||||||||||||||||||
| Intersegment | 971 | 194 | 33 | 4 | 166 | 17 | (1,385) | — | |||||||||||||||||||||||||||||||||||||||
| 2,727 | 2,729 | 2,662 | 960 | 2,459 | 154 | (1,385) | 10,306 | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity investments | 12 | (19) | (5) | — | — | — | — | (12) | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 679 | 84 | 472 | 34 | 47 | 79 | (12) | 1,383 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 102 | 65 | 104 | 14 | — | 15 | 1 | 301 |
| Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P- Americas | O&P- EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 3,621 | $ | 5,221 | $ | 5,278 | $ | 1,903 | $ | 4,155 | $ | 305 | $ | — | $ | 20,483 | |||||||||||||||||||||||||||||||
| Intersegment | 2,176 | 366 | 103 | 10 | 280 | 46 | (2,981) | — | |||||||||||||||||||||||||||||||||||||||
| 5,797 | 5,587 | 5,381 | 1,913 | 4,435 | 351 | (2,981) | 20,483 | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity investments | 8 | (48) | (6) | — | — | — | — | (46) | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 1,191 | 84 | 1,106 | 75 | 48 | 202 | (15) | 2,691 | |||||||||||||||||||||||||||||||||||||||
| Gain on sale of business | — | — | 293 | — | — | — | — | 293 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 355 | 194 | 292 | 48 | 31 | 44 | 3 | 967 |
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
| Six Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Millions of dollars | O&P– Americas | O&P– EAI | I&D | APS | Refining | Technology | Other | Total | |||||||||||||||||||||||||||||||||||||||
| Sales and other operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Customers | $ | 3,483 | $ | 5,245 | $ | 5,270 | $ | 1,951 | $ | 4,350 | $ | 254 | $ | — | $ | 20,553 | |||||||||||||||||||||||||||||||
| Intersegment | 2,052 | 376 | 74 | 6 | 299 | 39 | (2,846) | — | |||||||||||||||||||||||||||||||||||||||
| 5,535 | 5,621 | 5,344 | 1,957 | 4,649 | 293 | (2,846) | 20,553 | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity investments | 35 | (18) | (11) | (1) | — | — | — | 5 | |||||||||||||||||||||||||||||||||||||||
| EBITDA | 1,220 | 161 | 898 | (192) | 293 | 152 | (18) | 2,514 | |||||||||||||||||||||||||||||||||||||||
| Impairments | — | — | — | 252 | — | — | — | 252 | |||||||||||||||||||||||||||||||||||||||
| Capital expenditures | 184 | 119 | 283 | 31 | 2 | 32 | 2 | 653 |
*Disposition of Ethylene Oxide & Derivatives (“EO&D”) Business—*In May 2024, we sold our U.S. Gulf Coast-based EO&D business along with the production facilities located in Bayport, TX. The EO&D business was included in our I&D segment. In connection with the sale, we received cash proceeds of $700 million and recognized a pre-tax gain of $293 million, subject to post-closing working capital adjustments.
*Acquisition of Joint Venture—*In May 2024, we acquired a 35% interest in Saudi Arabia-based National Petrochemical Industrial Company (“NATPET”) from Alujain Corporation for approximately $500 million. The joint venture is enabled by our Spheripol polypropylene (“PP”) technology and positions us to expand our core PP business by gaining access to advantaged feedstocks. The joint venture has the capacity to produce 0.4 million tons of PP per year. We will market the majority of the off-take through our global sales team. The joint venture is included in our O&P-EAI segment and accounted for using the equity method of accounting.
*Houston Refinery Operations—*Costs incurred for the planned exit from the refinery business are as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | Cumulative June 30, | |||||||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | 2024 | ||||||||||||||||||||||||
| Accelerated lease amortization costs | $ | 10 | $ | 38 | $ | 18 | $ | 89 | $ | 219 | |||||||||||||||||||
| Personnel costs | 10 | 27 | 16 | 43 | 156 | ||||||||||||||||||||||||
| Asset retirement obligation accretion | 2 | 2 | 4 | 4 | 15 | ||||||||||||||||||||||||
| Asset retirement cost depreciation | 20 | 44 | 40 | 99 | 209 | ||||||||||||||||||||||||
| Refinery exit costs | $ | 42 | $ | 111 | $ | 78 | $ | 235 | $ | 599 |
Total costs incurred since our decision to exit the refining business through June 30, 2024, were $599 million. Our estimate of total exit costs, inclusive of costs incurred to date, ranges from $560 million to $1,000 million.
In subsequent periods, we expect to incur additional costs primarily consisting of accelerated amortization of operating lease assets of $10 million to $40 million, personnel costs of $15 million to $70 million and other charges of $20 million to $60 million.
In connection with the planned exit from the refinery business, we recorded liabilities for asset retirement obligations of $264 million as of June 30, 2024. We estimate that the Houston refinery’s asset retirement obligations are in the range of $150 million to $450 million.
LYONDELLBASELL INDUSTRIES N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
*Segment Structure Changes and Related Goodwill Impairment—*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. As a result of the reallocation of goodwill and the change in both fair value and carrying value among reporting units, we recognized a non-cash goodwill impairment charge of $252 million in the first quarter of 2023 in our APS segment.
A reconciliation of EBITDA to Income from continuing operations before income taxes is shown in the following table for each of the periods presented:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| Millions of dollars | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| EBITDA: | |||||||||||||||||||||||
| Total segment EBITDA | $ | 1,651 | $ | 1,395 | $ | 2,706 | $ | 2,532 | |||||||||||||||
| Other EBITDA | (7) | (12) | (15) | (18) | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Depreciation and amortization expense | (387) | (391) | (752) | (787) | |||||||||||||||||||
| Interest expense | (120) | (115) | (247) | (231) | |||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Interest income | 37 | 28 | 78 | 51 | |||||||||||||||||||
| Income from continuing operations before income taxes | $ | 1,174 | $ | 905 | $ | 1,770 | $ | 1,547 |
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