LyondellBasell(LYB) - 2025 Q2 - Quarterly Report

Part I – Financial Information Item 1. Consolidated Financial Statements (Unaudited) This section presents LyondellBasell Industries N.V.'s unaudited consolidated financial statements for the quarter ended June 30, 2025 Consolidated Statements of Income This section details the company's income statement, showing a significant decrease in net income for the three and six months ended June 30, 2025 Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Sales and other operating revenues | 7,658 | 8,678 | -11.8% | | Operating income | 285 | 999 | -71.5% | | Income from continuing operations | 155 | 946 | -83.6% | | Net income | 115 | 924 | -87.6% | | Diluted EPS (Continuing operations) | $0.47 | $2.88 | -83.7% | | Diluted EPS (Total) | $0.34 | $2.82 | -87.9% | Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Sales and other operating revenues | 15,335 | 16,982 | -9.7% | | Operating income | 399 | 1,650 | -75.8% | | Income from continuing operations | 178 | 1,379 | -87.1% | | Net income | 292 | 1,397 | -79.1% | | Diluted EPS (Continuing operations) | $0.53 | $4.20 | -87.4% | | Diluted EPS (Total) | $0.88 | $4.25 | -79.3% | - The company recorded a $32 million impairment charge in the three and six months ended June 30, 2025, with no corresponding charge in 2024[9] Consolidated Statements of Comprehensive Income This section presents the consolidated statements of comprehensive income, highlighting the impact of foreign currency translations on total comprehensive income Comprehensive Income Summary | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Net income | 115 | 924 | 292 | 1,397 | | Total other comprehensive income (loss) | 94 | 9 | 179 | (47) | | Comprehensive income | 209 | 933 | 471 | 1,350 | - Foreign currency translations were a significant driver of other comprehensive income, contributing $127 million in Q2 2025, a reversal from a loss of $44 million in Q2 2024[11] Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025 Key Balance Sheet Items | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 1,700 | 3,375 | | Total current assets | 11,076 | 12,266 | | Property, plant and equipment, net | 15,727 | 15,066 | | Total assets | 35,352 | 35,746 | | Liabilities & Equity | | | | Total current liabilities | 6,244 | 6,705 | | Long-term debt | 11,211 | 10,532 | | Total equity | 11,921 | 12,474 | - As of June 30, 2025, the company classified $832 million in assets and $567 million in liabilities as held for sale, which were not present at year-end 2024[14][17] Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 (Millions USD) | 2024 (Millions USD) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (228) | 1,234 | | Net cash used in investing activities | (934) | (823) | | Net cash used in financing activities | (598) | (893) | | Decrease in cash and cash equivalents | (1,684) | (541) | - Operating cash flow turned negative in the first six months of 2025, a significant decrease from a positive flow of $1.2 billion in the same period of 2024, primarily due to lower net income and negative changes in working capital, particularly accounts payable[20] - The company increased spending on share repurchases to $201 million in H1 2025 from $75 million in H1 2024 and paid $878 million in dividends[23] Consolidated Statements of Shareholders' Equity This section details changes in shareholders' equity, including net income, dividends, and share repurchases for the six months ended June 30, 2025 Changes in Shareholders' Equity (Six Months Ended June 30, 2025) | Description | Amount (Millions USD) | | :--- | :--- | | Beginning Balance (Dec 31, 2024) | 12,462 | | Net income | 292 | | Other comprehensive income | 179 | | Dividends - common stock | (878) | | Repurchases of Company ordinary shares | (201) | | Ending Balance (June 30, 2025) | 11,909 | Notes to the Consolidated Financial Statements These notes provide detailed explanations of the financial statements, including discontinued operations, asset sales, debt, and revenue disaggregation - In February 2025, the company ceased operations at its Houston refinery, and the refining business is now reported as a discontinued operation for all periods presented[35] - In June 2025, the company agreed to sell select European olefins & polyolefins assets, expecting a loss on sale of approximately $700 million to $900 million upon closing, with a non-cash impairment loss of $32 million recognized in Q2 2025[41][43][45] - In May 2025, a subsidiary issued $500 million of 6.150% guaranteed notes due 2035, with proceeds intended for general corporate purposes, including repayment of 2025 notes[56] Revenue by Product (Six Months Ended June 30) | Product | 2025 (Millions USD) | 2024 (Millions USD) | | :--- | :--- | :--- | | Polyethylene | 3,660 | 3,840 | | Polypropylene | 3,103 | 3,075 | | Oxyfuels and related products | 2,282 | 2,541 | | Olefins and co-products | 1,999 | 2,562 | | Compounding and solutions | 1,817 | 1,903 | | Propylene oxide and derivatives | 1,144 | 1,232 | | Intermediate chemicals | 1,052 | 1,456 | | Other | 278 | 373 | | Total | 15,335 | 16,982 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial performance, condition, and future outlook, highlighting operational improvements and strategic capital allocation Overview This overview summarizes the company's financial performance, noting sequential improvements in Q2 2025 but a year-over-year decline in the first half - Q2 2025 results from continuing operations improved sequentially from Q1 2025, driven by higher operating rates in O&P-Americas and better margins in O&P-EAI, but were offset by a non-cash impairment on European assets held for sale[110] - First half 2025 results declined compared to the first half of 2024, primarily due to lower margins in the I&D and O&P-Americas segments, reduced Technology licensing, and the absence of a 2024 gain on the sale of the EO&D business[111] - The company used $228 million in cash from operations in H1 2025, invested $1,022 million in capital expenditures, and returned $1,079 million to shareholders via dividends and buybacks[113] Results of Operations This section analyzes the company's revenue, operating income, and tax rate, detailing the factors contributing to year-over-year declines - Revenues for H1 2025 decreased by 10% YoY to $15.3 billion, driven by a 6% decline in sales volumes and a 5% drop in average sales prices[118] - Operating income for H1 2025 fell 76% YoY to $399 million, with decreases across all segments, most notably in O&P-Americas (down $648 million) and I&D (down $462 million)[122] - The effective tax rate for H1 2025 was 37.1%, up from 20.8% in H1 2024, primarily due to the discrete tax recognition of foreign exchange gains and losses on lower pre-tax earnings[127] - Discontinued operations generated income of $114 million in H1 2025, largely due to a $196 million LIFO benefit from inventory liquidation at the closed Houston refinery in Q1 2025[128] Segment Analysis This section provides a detailed performance breakdown of the company's five operating segments, highlighting changes in EBITDA EBITDA by Segment (Six Months Ended June 30) | Segment | 2025 (Millions USD) | 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | O&P-Americas | 564 | 1,191 | -52.6% | | I&D | 380 | 1,106 | -65.6% | | Technology | 85 | 202 | -57.9% | | APS | 78 | 75 | +4.0% | | O&P-EAI | 19 | 84 | -77.4% | Financial Condition This section examines the company's cash flow from operations, capital expenditures, and financing activities for the first half of 2025 - Cash used in operating activities was $228 million in H1 2025, a sharp reversal from $1,234 million provided in H1 2024, driven by lower earnings, deferred tax payments, and timing of accounts payable[175] - Capital expenditures totaled $1,022 million in H1 2025, up from $967 million in H1 2024, with approximately 70% dedicated to sustaining maintenance[177] - Financing activities in H1 2025 included $878 million in dividend payments, $201 million in share repurchases, and the issuance of $500 million in new notes due 2035[179][180] Liquidity and Capital Resources This section details the company's cash improvement plan, capital expenditure budget, and available liquidity as of June 30, 2025 - The company announced a Cash Improvement Plan targeting $600 million in annualized savings for 2025, comprising $200 million in capex deferrals, $200 million in working capital reduction, and $200 million in fixed cost reductions[185] - The 2025 capital expenditure budget is approximately $1.7 billion, with construction of the Flex-2 propylene expansion project being delayed to preserve capital[186] - As of June 30, 2025, the company had $1.7 billion in cash and cash equivalents and $4.65 billion in unused availability under its credit facilities[188][189] Current Business Outlook This section provides the company's expectations for Q3 2025, including anticipated margins and operating rates across key segments - For Q3 2025, the company expects improved North American integrated polyethylene margins, steady seasonal demand in Europe, and continued low oxyfuels margins[192] - Planned Q3 2025 operating rates are 85% for O&P-Americas, 75% for European O&P-EAI, and 80% for I&D assets[193] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms no material changes to the company's market risk exposure since the last annual report - There have been no material changes to the company's market risk exposure during the first six months of 2025[201] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[203] - No material changes were made to the company's internal controls over financial reporting during the quarter[204] Part II – Other Information Item 1. Legal Proceedings This section discloses recent environmental legal matters, including lawsuits and proposed orders from regulatory bodies - In April 2025, the State of Texas sued a subsidiary, Equistar Chemicals, LP, for alleged violations of the Texas Clean Air Act between May 2018 and April 2021[208] - In May 2025, the Texas Commission on Environmental Quality issued a proposed order to resolve alleged air permitting exceedances at the La Porte Complex between 2020 and 2022[209] Item 1A. Risk Factors This section states that no material changes to the company's risk factors have occurred since the prior annual report - No material changes to the company's risk factors were identified since the last annual report[211] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities and a new authorization approved by shareholders Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30, 2025 | 1,552,339 | $58.09 | | May 1 - May 31, 2025 | — | $— | | June 1 - June 30, 2025 | — | $— | | Total | 1,552,339 | $58.09 | - On May 23, 2025, shareholders approved a new share repurchase authorization for up to 34,042,250 shares, valid through November 23, 2026[213] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[214] Item 5. Other Information This section confirms that no Section 16 officers or directors adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No Section 16 officers or directors adopted or terminated a Rule 10b5-1 trading plan during Q2 2025[215] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and key agreements - Exhibits filed include officer certifications, details on the 6.150% Guaranteed Notes due 2035, an amendment to the Receivables Purchase Agreement, and the Put Option Letter Agreement for the sale of European assets[216]