LyondellBasell Reports 2022 net income of $353 million

Fourth quarter 2022 EBITDA, excluding identified items, was $792 million, or $865 million. In addition to the identified items, non-cash LIFO inventory valuation charges impacted pre-tax quarterly results by approximately $90 million.

Full year 2022 net income was $3.9 billion, or $11.81 per share. During the year, the company recognised identified items of $213 million, net of tax.  These items, which impacted full year earnings by $0.65 per share, included a non-cash impairment charge related to the sale of its Australian polypropylene business and costs incurred from plans to exit the refining business.  

Full year 2022 EBITDA was $6.3 billion, or $6.5 billion, excluding identified items.  In addition to the identified items, full year 2022 EBITDA was further impacted by a $103 million pre-tax pension settlement charge. 

"In the fourth quarter, our businesses delivered excellent cash generation which enabled us to confidently advance our strategic priorities to build a stronger and more sustainable future for LyondellBasell.  Our strategy development and implementation is proceeding well and has been supported by the creation of the new organisational structure.  We aligned our goals for 2030 greenhouse gas emission reductions with science-based guidance by increasing our scope 1 and scope 2 emission reduction target to 42 per cent and establishing a new scope 3 reduction target of 30 per cent," said Peter Vanacker, chief executive officer of LyondellBasell.

During the fourth quarter, price and margin pressures from new supply, customer destocking and weak demand in petrochemical markets stabilised at levels seen toward the end of the third quarter.  The company reduced operating rates to match lower demand and decreased working capital by more than $700 million during the fourth quarter. Lower product prices were partially offset by moderating energy and feedstock costs.  Margins for products from LyondellBasell's oxyfuels and refining businesses remained well above typical fourth quarter levels, says a company release.

"During 2022, LyondellBasell's balanced business portfolio, excellent cash generation and strong, investment-grade balance sheet enabled the company to successfully navigate through challenging market conditions while continuing to provide significant returns for our shareholders," said Vanacker. 

Over the full year, petrochemical markets were pressured by high and volatile energy and feedstock costs as well as softer global demand. The company's Olefins & Polyolefins businesses encountered headwinds from reduced demand in Europe and Asia as well as global capacity additions.  Lower consumer demand for durable goods compressed margins for several products in the intermediates and derivatives segment.  Oxyfuels and refining margins benefited from increased global mobility and favorable markets.

LyondellBasell generated $6.1 billion in cash from operating activities during 2022.  The company remains committed to a disciplined approach to capital allocation.  In 2022, approximately $1.9 billion was reinvested in the business and $3.7 billion was returned to shareholders through the quarterly dividend, a special dividend and share repurchases.

In 2022, the company launched a comprehensive review of our strategy.  Initial strategic actions included the decision to exit the refining business and the sale of the Australian polypropylene business.  The Circular & Low Carbon Solutions business unit was created to accelerate progress in capturing value from serving the rapidly growing customer demand for recycled and renewable solutions.  Organisational and cultural initiatives are being implemented to increase focus on agility, accountability and value generation. In October, the company introduced a value enhancement programme that is expected to generate $750 million in recurring annual EBITDA by the end of 2025.  Progress on this programme is on track, the release stated.

The company reported stable demand from consumer packaging, oxyfuels and refining markets in January.  Moderating energy and feedstock costs are providing some offsets to tepid global demand.  Nonetheless, challenging market conditions are expected to persist through the first half of 2023, the company stated.  LyondellBasell is aligning production with global demand trends and expects first quarter average utilisation rates for the assets operated by the company to be 80 per cent for each of the Olefins & Polyolefins and Intermediates & Derivatives segments.  Start-up activities for the new PO/TBA capacity in Houston remain on track for the end of the first quarter 2023. The company expects typical spring and summer seasonal demand improvements and is prepared to leverage any increased economic activity in China as the year progresses.

"LyondellBasell continues on its journey to build a resilient strategy that provides sustainable growth and value for the company, its shareholders and our customers.  At our Capital Markets Day on March 14th, we will share our strategy aimed at extending the company's track record of cash generation and strong returns for shareholders," said Vanacker.