LyondellBasell(LYB) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - LyondellBasell reported earnings of $5.25 per share, more than four times higher than the same quarter last year [9] - EBITDA was approximately $2.7 billion, a year-over-year quarterly improvement of $1.8 billion [9] - The company generated a record $2.1 billion in cash from operating activities during the third quarter [10][16] Business Line Data and Key Metrics Changes - The Olefins and Polyolefins Americas segment delivered EBITDA of about $1.6 billion, slightly lower than the second quarter due to lower margins and volumes [20] - The Olefins and Polyolefins Europe, Asia, International segment reported third quarter EBITDA of $474 million, $234 million lower than the second quarter due to higher feedstock costs and lower seasonal demand [21] - The Intermediates and Derivatives segment's EBITDA was $348 million, $248 million lower than the prior quarter, impacted by rising feedstock and energy costs [24] - The Advanced Polymer Solutions segment had EBITDA of $121 million, $8 million lower than the second quarter, affected by customer supply chain constraints [26] - The Refining segment saw a significant improvement, with EBITDA rising to $41 million, up $122 million from the previous quarter [27] - The Technology segment achieved record EBITDA of $155 million, $63 million higher than the prior quarter due to increased licensing revenue [28] Market Data and Key Metrics Changes - The company noted robust global demand and tight market conditions, which are expected to support continued growth [11] - The average crude throughput at the refinery increased to 260 thousand barrels per day, with operating rates at 97% [27] Company Strategy and Development Direction - LyondellBasell is focused on building value for the long term and has committed to achieving net zero greenhouse gas emissions from its global operations by 2015 [13] - The company plans to improve energy efficiency, phase out coal, and procure at least 50% of its electricity from renewable sources by 2030 [14][15] - The company aims to pursue prudent and accretive investments that could add up to $1.5 billion of EBITDA to mid-cycle earnings [29][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver for stakeholders, citing strong demand for products and a well-funded economy [9][11] - The company anticipates some margin compression due to typical fourth-quarter seasonality and rising feedstock and energy prices, but expects markets to remain strong [35] - Management highlighted the importance of addressing supply chain constraints and the potential for pent-up consumer demand to drive future growth [36] Other Important Information - The company has resumed share repurchases and reduced its share count by approximately 1 million [17] - LyondellBasell's credit ratings were upgraded by S&P Global Ratings, indicating a stable outlook [18] Q&A Session All Questions and Answers Question: What should the new CEO of LyondellBasell understand? - The new CEO should focus on safety, reliability, cost efficiency, and sustainability initiatives to be successful [42] Question: What are the utilization rates for assets in 2022? - Management expects polypropylene rates to return over 90% by mid-next year as supply chain issues normalize [44][46] Question: What is the near-term operational outlook for the refinery? - The refinery is expected to perform better in Q4, with positive trends in demand and profitability [50][51] Question: Where can the company be wrong regarding margin expectations? - Potential spikes in energy prices and uncertainties in the Chinese market could impact margins [54][56] Question: What are the dynamics around polyethylene pricing? - Management anticipates moderation in polyethylene prices, with a more modest margin compression than some forecasts suggest [64][66] Question: How does LyondellBasell plan to decarbonize its asset base? - The company plans to maintain a capital expenditure of about $2 billion per year through 2025, with potential increases for sustainability initiatives in the later part of the decade [68][69]