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

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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 the 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.”).

In February 2025, we ceased business operations at our Houston refinery. Accordingly, our refining business, previously disclosed as the Refining segment, is reported as a discontinued operation. The related operating results of our refining business are reported as discontinued operations for all periods presented.

OVERVIEW

Results from continuing operations for the second quarter of 2025 increased compared to the first quarter of 2025. In our Olefins and Polyolefins-Americas (“O&P-Americas”) segment, the completion of a turnaround at our Channelview complex resulted in higher operating rates that supported a sequential improvement in integrated polyethylene volumes and margins. In our Olefins and Polyolefins-Europe, Asia, International (“O&P-EAI”) segment, lower feedstock costs helped improve integrated polyethylene margins while polyolefin volumes benefited from increased seasonal demand. These improvements were offset by the recognition of a non-cash impairment related to European assets classified as held for sale within our O&P-EAI segment. In our Intermediates and Derivatives (“I&D”) segment, intermediate chemical margins improved due to lower benzene costs and price support from second quarter industry outages. Oxyfuels and related products margins fell as lower crude oil prices limited the typical seasonal uplift from the summer driving season. Results for our I&D segment were further improved by the absence of shutdown costs related to our Propylene Oxide Styrene Monomer (POSM) production unit at the Maasvlakte site in the Netherlands (the “European PO Joint Venture”) recognized in the first quarter of 2025. During the second quarter, global markets began to adapt to trade volatility, contributing to a more stable operating environment across several product chains.

Results from continuing operations for the first six months of 2025 decreased compared to the first six months of 2024. In our I&D segment, oxyfuels and related products margins declined due to lower crude oil prices. Results for our I&D segment were further impacted by the recognition of shutdown costs mentioned above and a gain on sale of our U.S. Gulf Coast-based Ethylene Oxide & Derivatives (“EO&D”) business recognized during the second quarter of 2024. In our O&P-Americas segment, margins decreased across most businesses as feedstock and energy costs increased compared to the prior year. In our Technology segment, licensing results decreased as the planned pace of global polyolefin capacity additions moderate.

In June 2025, we entered into an agreement for the sale of select olefins & polyolefins assets and the associated business in Europe. The sites to be sold have been part of the previously announced European strategic assessment and are located in Berre l’Etang (France), Münchsmünster (Germany), Carrington (United Kingdom), and Tarragona (Spain). In connection with the sale, we expect to recognize a loss on sale of approximately $700 million to $900 million upon closing.

During the first six months of 2025 we used $228 million of cash from operating activities primarily reflecting earnings adjusted for non-cash items, timing of payment of Accounts payable and tax payments, including U.S. Federal corporate income tax payments deferred from 2024 into 2025 under Hurricane Beryl disaster relief. In connection with our overall capital allocation strategy, we invested $1,022 million in capital expenditures and returned $1,079 million to shareholders through dividend payments and share repurchases.

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

Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues$7,658$7,677$15,335$16,982
Cost of sales6,8717,12813,99914,444
Impairments32—32—
Selling, general and administrative expenses435401836823
Research and development expenses35346965
Operating income2851143991,650
Interest expense(118)(107)(225)(247)
Interest income21305178
Gain on sale of business———293
Other income, net29215014
Income (loss) from equity investments718(46)
Income from continuing operations before income taxes224592831,742
Provision for income taxes6936105363
Income from continuing operations155231781,379
(Loss) income from discontinued operations, net of tax(40)15411418
Net income1151772921,397
Other comprehensive income (loss), net of tax –
Financial derivatives(35)29(6)50
Defined benefit pension and other postretirement benefit plans2(6)(4)7
Foreign currency translations12762189(104)
Total other comprehensive income (loss), net of tax9485179(47)
Comprehensive income$209$262$471$1,350

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RESULTS OF OPERATIONS

Revenues—Revenues remained relatively unchanged in the second quarter of 2025 compared to the first quarter of 2025. Lower average sales prices for many of our products resulted in a 5% decrease in revenues. Favorable foreign exchange impact resulted in a 4% increase in revenues. Higher sales volumes resulted in a 1% increase in revenue.

Revenues decreased by $1,647 million or 10% in the first six months of 2025 compared to the first six months of 2024. Lower sales volumes driven by lower demand led to an 6% decrease in revenues. Lower average sales prices for many of our products resulted in a 5% decrease in revenues. Favorable foreign exchange impact led to a 1% increase in revenues.

Cost of Sales—Cost of sales decreased by $257 million, or 4%, in the second quarter of 2025 compared to the first quarter of 2025 and by $445 million or 3% in the first six months of 2025 compared to the first six months of 2024 primarily due to lower feedstock and energy costs. Additionally, during the first quarter of 2025 we recognized $117 million in shutdown costs related to our plans to permanently close the European PO Joint Venture.

Impairments—During the second quarter of 2025, we recognized a non-cash impairment charge of $32 million related to property, plant and equipment associated with the European assets classified as held for sale within our O&P EAI segment.

Operating Income—Operating income increased by $171 million, or 150%, in the second quarter of 2025 compared to the first quarter of 2025. Operating income in our I&D and O&P-Americas segments increased by $160 million and $57 million, respectively. These increases were partially offset by decreases in our Technology, O&P-EAI, and APS segments of $20 million, $17 million, and $7 million, respectively.

Operating income decreased by $1,251 million, or 76%, in the first six months of 2025 compared to the first six months of 2024. Operating income in our O&P-Americas, I&D, Technology, O&P-EAI and APS segments decreased by $648 million, $462 million, $117 million, $82 million and $1 million, respectively.

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

Gain on Sale of Business—In the second quarter of 2024, we completed the sale of our EO&D business and associated production facilities located in Bayport, Texas and recognized a pre-tax gain of $293 million.

Income (Loss) from Equity Investments—Income from equity investments increased by $6 million, in the second quarter of 2025 compared to the first quarter of 2025 primarily as a result of improved results following a turnaround in the first quarter of 2025 at a Saudi Arabian joint venture in our O&P EAI segment. Income from equity investments increased by $54 million or 117% in the first six months of 2025 compared to the first six months of 2024 as the first six months of 2024 included equity losses recognized by a Chinese joint venture in our O&P-EAI segment. Our Chinese joint venture was subsequently fully impaired during the fourth quarter of 2024.

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Income Taxes—Our effective income tax rate for the second quarter of 2025 was 30.8% compared to 61.0% for the first quarter of 2025. The lower effective tax rate for the second quarter of 2025 was due to the relative impact of our tax rate drivers, primarily exempt income, foreign exchange gains and losses, and fluctuations in return to accruals, due to higher earnings that decreased our effective income tax rate by 43.5 percentage points. This decrease was partially offset by an increase in the discrete tax recognition of foreign exchange gains and losses by 15.2 percentage points.

Our effective income tax rate for the first six months of 2025 was 37.1% compared to 20.8% for the first six months of 2024. The higher effective tax rate for the first six months of 2025 was primarily due to the discrete tax recognition of foreign exchange gains and losses with lower pre-tax earnings that increased our effective tax rate by 32.2 percentage points. This increase to the effective tax rate was partially offset by the increased relative impact of our tax rate drivers, primarily exempt income, due to decreased earnings that decreased our effective income tax rate by 11.9 percentage points.

Income (Loss) from Discontinued Operations, Net of Tax—Income from discontinued operations decreased by $194 million in the second quarter of 2025 compared to the first quarter of 2025, and increased $96 million in the first six months of 2025 compared to the first six months of 2024. These changes were primarily the result of the recognition a last-in, first-out (“LIFO”) benefit of $196 million for the liquidation of low cost inventory in the first quarter of 2025. The remainder of the change was primarily driven by the cessation of business operations at our Houston refinery in February of 2025.

Comprehensive Income—Comprehensive income decreased by $53 million in the second quarter of 2025 compared to the first quarter of 2025, primarily due to the decrease in Net income and decreases in financial derivatives partially offset by the net favorable impacts of unrealized changes in foreign currency translation adjustments. Comprehensive income decreased by $879 million in the first six months of 2025 compared to the first six months of 2024, primarily due to the decrease in Net income partially offset by the net favorable impacts of unrealized changes in foreign currency translation adjustments. The components of Other comprehensive income (loss) are discussed below.

Financial derivatives designated as cash flow hedges, primarily our commodity swaps, led to a decrease in Comprehensive income of $64 million and $56 million in the second quarter of 2025 compared to the first quarter of 2025 and in the first six months of 2025 compared to the first six months of 2024, respectively, reflecting commodity price volatility.

Foreign currency translations increased Comprehensive income by $65 million and $293 million in the second quarter of 2025 compared to the first quarter of 2025 and in the first six months of 2025 compared to the first six months of 2024, respectively, primarily due to the weakening of the U.S. dollar relative to the euro, partially offset by the effective portion of our net investment hedges.

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Segment Analysis

We use net income 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 the 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 EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Net income$115$177$292$1,397
Provision for income taxes6278140371
Depreciation and amortization332323655752
Interest expense, net9777174169
EBITDA$606$655$1,261$2,689

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

Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues:
O&P-Americas segment$2,377$2,481$4,858$5,797
O&P-EAI segment2,7042,6005,3045,587
I&D segment2,2752,2984,5735,381
APS segment9179081,8251,913
Technology segment137120257351
Other, including intersegment eliminations(752)(730)(1,482)(2,047)
Total$7,658$7,677$15,335$16,982
Operating income (loss):
O&P-Americas segment$142$85$227$875
O&P-EAI segment(40)(23)(63)19
I&D segment151(9)142604
APS segment10172728
Technology segment224264181
Other, including intersegment eliminations—22(57)
Total$285$114$399$1,650

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Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Depreciation and amortization:
O&P-Americas segment$164$155$319$303
O&P-EAI segment383977106
I&D segment9999198203
APS segment20204042
Technology segment11102121
Total$332$323$655$675
Income (loss) from equity investments:
O&P-Americas segment$4$7$11$8
O&P-EAI segment3(6)(3)(48)
I&D segment———(6)
Total$7$1$8$(46)
Gain on sale of business:
I&D segment$—$—$—$293
Total$—$—$—$293
Other income, net:
O&P-Americas segment$3$4$7$5
O&P-EAI segment1787
I&D segment3644012
APS segment29115
Other, including intersegment eliminations(13)(3)(16)(15)
Total$29$21$50$14
EBITDA:
O&P-Americas segment$313$251$564$1,191
O&P-EAI segment2171984
I&D segment286943801,106
APS segment32467875
Technology segment335285202
Discontinued operations(47)196149103
Other, including intersegment eliminations(13)(1)(14)(72)
Total$606$655$1,261$2,689

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Olefins and Polyolefins-Americas Segment

Overview—EBITDA increased in the second quarter of 2025 compared to the first quarter of 2025 primarily due to higher polyethylene margins. EBITDA decreased in the first six months of 2025 relative to the first six months of 2024 as margins decreased for most businesses.

*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 second and first quarter of 2025, and the first six months of 2025 and 2024, approximately 75% 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 EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues$2,377$2,481$4,858$5,797
Income from equity investments47118
EBITDA3132515641,191

Revenue—Revenues for our O&P-Americas segment decreased by $104 million, or 4% in the second quarter of 2025 compared to the first quarter of 2025 and by $939 million, or 16%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—The revenue decrease was due to lower volumes sold during the second quarter of 2025 relative to the first quarter of 2025.

First six months of 2025 versus first six months of 2024—Volumes driven by planned and unplanned outages resulted in a 12% decrease in revenue. Lower average sales prices driven by lower oil price environment resulted in a 4% decrease in revenue.

EBITDA—EBITDA increased by $62 million, or 25%, in the second quarter of 2025 compared to the first quarter of 2025 and decreased by $627 million, or 53%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—Higher polyethylene results led to a 33% increase in EBITDA driven by improved margins primarily from lower ethylene costs. Lower olefins results led to a 7% decrease in EBITDA driven primarily by lower margins due to lower ethylene sales price partially offset by lower feedstock and energy prices.

First six months of 2025 versus first six months of 2024—Lower olefins results led to a 32% decrease in EBITDA driven by lower ethylene margins from a decrease in co-product contribution combined with higher energy costs. Lower polyethylene results led to a 19% decrease in EBITDA primarily driven by lower product margins attributed to unfavorable macroeconomic conditions.

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Olefins and Polyolefins-Europe, Asia, International Segment

Overview—EBITDA decreased in the second quarter of 2025 relative to the first quarter of 2025 and in the first six months of 2025 relative to the first six months of 2024 primarily due to the recognition of a $32 million impairment charge recognized in the second quarter of 2025 related to assets held for sale.

Higher olefins margins in the second quarter of 2025 compared to the first quarter of 2025 benefited EBITDA. Lower volumes in the first six months of 2025 relative to the first six months of 2024 were partially offset by increased income from our equity investments.

Ethylene Raw Materials—In Europe, naphtha is the primary raw material for our ethylene production and represented approximately 60% to 70% of the raw materials used in the second and first quarter of 2025, and the first six months of 2025 and 2024.

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

Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues$2,704$2,600$5,304$5,587
Income (loss) from equity investments3(6)(3)(48)
EBITDA2171984

Revenue—Revenues increased by $104 million, or 4%, in the second quarter of 2025 compared to the first quarter of 2025 and decreased by $283 million, or 5%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—Favorable foreign exchange impacts resulted in a revenue increase of 7%. Higher volumes resulted in a revenue increase of 6% primarily due to higher demand. These increases were offset by lower average sales prices primarily as a result of a decrease in the price of naphtha which drove a 9% decrease in revenue.

First six months of 2025 versus first six months of 2024—Lower average sales prices primarily as a result of a decrease in the price of naphtha drove a 4% decrease in revenue. Lower volumes resulted in a decrease of 2% due to lower demand and unplanned downtime. Favorable foreign exchange impacts resulted in a 1% increase in revenues.

EBITDA—EBITDA decreased by $15 million, or 88%, in the second quarter of 2025 compared to the first quarter of 2025 and by $65 million, or 77%, in the first six months of 2025 compared to the first six months of 2024.

During the second quarter of 2025, we recognized a $32 million non-cash impairment charge related to assets held for sale. Also, during the second quarter, in connection with our planned European asset sale, we incurred transaction costs of $10 million.

Second quarter of 2025 versus first quarter of 2025—EBITDA decreased largely due to the recognition of the non-cash impairment charge and costs incurred related to our planned European asset disposition. These costs were partially offset by improved olefins results which led to a 288% increase in EBITDA driven by improved cracker margins primarily due to lower feedstock costs.

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First six months of 2025 versus first six months of 2024—As noted above, the first six months of 2025 were impacted by non-cash impairment charges and transaction costs. Further, lower polyethylene results led to a 61% decrease in EBITDA driven by lower margins from lower average sales prices. Lower olefins results drove a 48% decrease in EBITDA driven by lower volumes as a result of unplanned downtime. These decreases were partially offset by improved income from equity investments which led to a 55% increase in EBITDA driven by the absence of losses recognized by a Chinese joint venture in the first six months of 2024.

Intermediates and Derivatives Segment

Overview—EBITDA increased in the second quarter of 2025 relative to the first quarter of 2025 as a result of shutdown costs incurred by our European PO Joint Venture in the first quarter of 2025 and improved intermediate chemicals margins in the second quarter of 2025.

EBITDA decreased in the first six months of 2025 compared to the first six months of 2024 primarily driven by lower oxyfuels and related products margins, the absence of a gain on sale of our EO&D business recognized in the first six months of 2024, and the first quarter of 2025 shutdown costs related to our European PO Joint Venture.

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

Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues$2,275$2,298$4,573$5,381
Loss from equity investments———(6)
EBITDA286943801,106

Revenue—Revenues decreased by $23 million, or 1%, in the second quarter of 2025 compared to the first quarter of 2025 and by $808 million, or 15%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—Lower average sales prices resulted in a 8% decrease in revenue from falling feedstock pricing in intermediate chemicals and low octane values in the U.S. Gulf Coast. Sales volumes increased due to seasonal demand uptick during the summer driving season resulting in a 4% increase in revenue. Favorable foreign exchange impacts resulted in a 3% increase in revenue.

First six months of 2025 versus first six months of 2024—Lower average sales prices resulted in a 13% decrease in revenue driven primarily by oxyfuels and related products as a result of lower crude, gasoline crack spreads, and blend premiums. Sales volumes declined resulting in a 2% decrease in revenue due to the second quarter of 2024 sale of our EO&D business and associated production facilities located in Bayport, Texas.

EBITDA—EBITDA increased by $192 million, or 204%, in the second quarter of 2025 compared to the first quarter of 2025 and decreased by $726 million, or 66%, in the first six months of 2025 compared to the first six months of 2024.

In May 2024, we sold our U.S. Gulf Coast-based EO&D business along with the production facilities located in Bayport, TX and recognized a pre-tax gain of $293 million during the quarter.

In March 2025, we announced our plans to permanently close the European PO Joint Venture, which resulted in the recognition of $117 million of shutdown costs in the first quarter of 2025.

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Second quarter of 2025 versus first quarter of 2025—Intermediate chemicals results led to an EBITDA increase of 64% primarily driven by higher margins from lower feedstock costs as well as a $36 million gain on sale of precious metals. Propylene oxide and derivatives results led to a 20% increase in EBITDA as margins improved on lower feedstock costs. The remaining change was largely driven by costs incurred related to the announced closure of our European PO Joint Venture in the first quarter of 2025.

First six months of 2025 versus first six months of 2024—Oxyfuels and related products results declined 30% largely due to margin compression due to lower crude oil prices. The remaining change was due to the recognition of the gain on sale of our EO&D business in 2024 and costs incurred related to the announced closure of our European PO Joint Venture in the first quarter of 2025.

Advanced Polymer Solutions Segment

Overview—EBITDA decreased in the second quarter of 2025 relative to the first quarter of 2025, primarily due to costs incurred in connection with our Cash Improvement Plan and lower volumes. EBITDA increased in the first six months of 2025 relative to the first six months of 2024, primarily due to higher margins.

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

Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues$917$908$1,825$1,913
EBITDA32467875

Revenue—Revenues increased by $9 million, or 1%, in the second quarter of 2025 compared to the first quarter of 2025 and decreased by $88 million, or 5%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—Favorable foreign exchange impacts resulted in a revenue increase of 4%. Sales volumes decreased resulting in a 3% decrease in revenue stemming from weaker automotive demand and challenging market conditions.

First six months of 2025 versus first six months of 2024—Sales volumes decreased resulting in a 5% decrease in revenue stemming from lower demand. Lower average sales prices resulted in a 1% decrease in revenue. Favorable foreign exchange impacts resulted in a revenue increase of 1%.

EBITDA—EBITDA decreased by $14 million or 30% in the second quarter of 2025 compared to the first quarter of 2025 and increased by $3 million or 4% in the first six months of 2025 compared to the first six months of 2024. In April 2025, we announced our Cash Improvement Plan. Costs incurred during the second quarter of 2025 associated with this plan were $8 million.

Second quarter of 2025 versus first quarter of 2025—Lower volumes primarily from weaker automotive demand and challenging market conditions resulted in a 15% decrease in EBITDA. The remaining decrease was primarily related to costs incurred related to the Cash Improvement Plan.

First six months of 2025 versus first six months of 2024—Results were relatively unchanged as costs incurred related to our Cash Improvement Plan were offset by improved margins related to lower manufacturing costs.

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Technology Segment

Overview—EBITDA decreased in the second quarter of 2025 compared to the first quarter of 2025, primarily due to lower catalyst margins. EBITDA decreased in the first six months of 2025 compared to the first six months of 2024, primarily due to lower licensing results as the planned pace of global polyolefin capacity additions moderate.

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

Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,
Millions of dollars2025202520252024
Sales and other operating revenues$137$120$257$351
EBITDA335285202

Revenue—Revenues increased by $17 million, or 14%, in the second quarter of 2025 compared to the first quarter of 2025 and decreased by $94 million, or 27%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—Favorable foreign exchange impact resulted in an 8% increase in revenues. Higher catalyst volumes resulted in a 5% increase in revenues driven by improved demand relative to prior quarter. Higher licensing revenues resulting from more contracts reaching significant milestones drove a 2% increase in revenues. Lower average catalyst sales price from product mix resulted in a 1% decrease in revenues.

First six months of 2025 versus first six months of 2024—Lower licensing revenues resulting from recognition of revenue on fewer contracts drove a 24% decrease in revenues. Lower catalyst volume resulted in a 3% decrease in revenues due to continued lower polymer end use demand. Lower average catalyst sales price resulted in a 1% decrease in revenues. Favorable foreign exchange impact resulted in a 1% increase in revenues.

EBITDA—EBITDA decreased by $19 million, or 37%, in the second quarter of 2025 compared to the first quarter of 2025 and by $117 million, or 58%, in the first six months of 2025 compared to the first six months of 2024.

Second quarter of 2025 versus first quarter of 2025—Lower catalyst margins resulted in a 56% decrease in EBITDA due to increased costs. Higher catalyst sales volumes driven by improved demand resulted in a 10% increase in EBITDA. Favorable foreign exchange impact resulted in an 8% EBITDA increase.

First six months of 2025 versus first six months of 2024—Licensing results led to a 42% decrease in EBITDA as fewer contracts with lower average values reached significant milestones. Lower catalyst margins as a result of unfavorable product mix and higher operating cost from increased maintenance resulted in a 13% decrease in EBITDA.

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FINANCIAL CONDITION

The following table summarizes operating, investing and financing cash flow activities:

Six Months Ended June 30,
Millions of dollars20252024
Cash provided by (used in):
Operating activities$(228)$1,234
Investing activities(934)(823)
Financing activities(598)(893)

Operating Activities—Cash used in operating activities of $228 million in the first six months of 2025 primarily reflected earnings adjusted for non-cash items, $384 million of tax payments which includes $235 million U.S. Federal corporate income tax payments deferred from 2024 into 2025 under Hurricane Beryl disaster relief, and a $433 million change in Accounts payable which was driven by the timing of payments.

Cash provided by operating activities of $1,234 million in the first six months of 2024 primarily reflected earnings adjusted for non-cash items and cash activities primarily related to Accounts receivable, Inventories and Accounts payables. Increased Accounts receivable and Inventories of $604 million and $335 million, respectively, were associated with higher volumes sold to align with demand, coupled with timing of receipts. The increase of $373 million in Accounts payable was primarily driven by timing of payments and higher raw material costs.

Investing Activities—Capital expenditures in the first six months of 2025 and 2024 totaled $1,022 million and $967 million, respectively, of which approximately 70% and 80%, respectively, support sustaining maintenance such as turnaround activities at several sites as well as other plant health, safety and environmental projects. The remaining expenditures support profit-generating growth projects.

In June 2025, foreign currency contracts with an aggregate notional value of €200 million expired. Upon settlement of these foreign currency contracts, we paid €200 million ($234 million at the expiry spot rate) to our counterparties and received $225 million from our counterparties. Additionally, in March 2025 we received $59 million upon termination and cash settlement of our cross-currency interest rate swaps, designated as net investment hedges, maturing in 2025 and 2030.

In the second quarter of 2024 we sold our EO&D business for $700 million and invested approximately $500 million to acquire a 35% stake in the NATPET joint venture in Saudi Arabia.

Financing Activities—We made dividend payments totaling $878 million and $846 million in the first six months of 2025 and 2024, respectively. Additionally, we made payments of $201 million and $75 million to repurchase outstanding ordinary shares in the first six months of 2025 and 2024, respectively.

In May 2025, we issued $500 million of 6.150% guaranteed notes due 2035. Net proceeds from the sale of the notes are used for general corporate purposes, including the repayment of our 2025 Notes later in the year.

In February 2024, we issued $750 million of 5.5% guaranteed notes due 2034. In March 2024, we repaid the $775 million remaining of outstanding principal on our 5.75% senior notes due 2024.

For additional detail regarding these debt transactions see Note 8 to the Consolidated Financial Statements.

In April 2024, foreign currency contracts with an aggregate notional value of €784 million expired. Upon settlement of these foreign currency contracts, which were designated as cash flow hedges, we paid €784 million ($835 million at the expiry spot rate) to our counterparties and received $849 million from our counterparties.

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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 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, including a third quarter 2025 dividend of $1.37 per share. We have a 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 an investment grade balance sheet continues to be the foundation of our capital allocation strategy.

Cash Improvement Plan

In April 2025, to address ongoing macroeconomic volatility, we announced a Cash Improvement Plan. The plan now targets a $600 million run-rate in annualized savings for 2025. The Cash Improvement Plan includes three initiatives: (1) deferral of $200 million of capital spending; (2) $200 million net reduction in Accounts receivable, Inventory and Accounts payable; and (3) fixed cost reductions of $200 million, excluding one-time implementation costs estimated to be less than $50 million. We will continue to prioritize capital spending on maintenance and certain growth projects. The net reduction in Accounts receivable, Inventory and Accounts payable and fixed cost reductions are relative to our internal 2025 plan. Fixed cost reductions may be achieved through contract changes, reductions in employees and employee-related expenses or other means. As of June 30, 2025, we incurred $20 million in costs associated with the Cash Improvement Plan.

Capital Budget

In 2025, we plan to invest approximately $1.7 billion in capital expenditures. Approximately $1.2 billion of the budget is planned for sustaining maintenance, with the remaining budget supporting profit-generating growth projects. While we continue to invest in *MoReTec-*1 as planned, we are delaying construction to expand our propylene production capacity at our Channelview Complex (Flex-2) and delaying other capital projects to preserve capital during the cycle downturn. In 2026, we plan on investing up to $1.4 billion in capital expenditures.

Proposed Sale of Certain European Assets

In June 2025, we entered into an agreement for the sale of select olefins & polyolefins assets and the associated business in Europe. The sites to be sold have been part of the previously announced European strategic assessment and are located in Berre l’Etang (France), Münchsmünster (Germany), Carrington (United Kingdom), and Tarragona (Spain). In connection with the sale, we anticipate making a cash contribution of approximately $300 million to the sold asset group prior to closing the transaction. The transaction is expected to close in the first half of 2026.

Cash and Liquid Investments

As of June 30, 2025, we had Cash and cash equivalents totaling $1,700 million, which includes $487 million in jurisdictions outside of the U.S., which is largely held within the United Kingdom. There are currently no legal or economic restrictions that would materially impede our transfers of cash.

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Credit Arrangements

As of June 30, 2025, we had total debt, including current maturities, of $11,825 million. Additionally, we had $184 million of outstanding letters of credit, bank guarantees and surety bonds issued under uncommitted credit facilities.

We had total unused availability under our credit facilities of $4,650 million as of June 30, 2025, which included the following:

  • $3,750 million under our $3,750 million Senior Revolving Credit Facility. This facility backs our $2,500 million commercial paper program. Availability under the facility is net of outstanding borrowings, outstanding letters of credit provided under the facility and notes issued under our commercial paper program. As of June 30, 2025, 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. As of June 30, 2025, we had no borrowings or letters of credit outstanding under this facility. In May 2025, we extended the term of the facility to June 2026 in accordance with the terms of the agreement.

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 2025, our shareholders approved a proposal to authorize us to repurchase up to 34.0 million ordinary shares through November 23, 2026, 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 six months of 2025, we purchased approximately 3.0 million shares under our share repurchase authorizations for $201 million.

As of July 30, 2025, we had approximately 34.0 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 12 to the Consolidated Financial Statements.

CURRENT BUSINESS OUTLOOK

In the third quarter, we expect North American integrated polyethylene margins to improve due to the completion of planned maintenance in April and increased prices supported by solid domestic demand and stronger export volumes. In Europe, steady seasonal demand and favorable feedstock costs are expected to continue. Ongoing capacity rationalizations across the region should help to balance regional supply and demand. Oxyfuels margins are expected to remain low for the remainder of the summer season. We continue to carefully evaluate potential risks and opportunities associated with evolving tariffs and global trade flows.

To align with global demand and our planned maintenance, we expect third quarter operating rates of 85% for our O&P-Americas assets, 75% for our European O&P-EAI assets and 80% for our I&D assets.

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ACCOUNTING AND REPORTING CHANGES

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

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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 through tariffs or otherwise, limit or disrupt trade, 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;

  • the successful outcome of any planned sale of our assets, or our ability to acquire or dispose of product lines or businesses could disrupt our business and harm our financial condition;

  • 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;

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  • 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 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;

  • our ability to execute and achieve expected results of our value enhancement program and cash improvement plan;

  • 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.

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