LyondellBasell Industries (NYSE:LYB) executives emphasized cash preservation, cost discipline, and safety as the company worked through what management described as one of the longest and most difficult downturns in the petrochemical cycle, during a teleconference covering fourth-quarter and full-year 2025 results.
Management characterizes 2025 as a prolonged industry trough
CEO Peter Vanacker said 2025 featured “some of the most challenging market conditions” he has seen, with industry margins “approximately 45% below historical averages,” and North American polyolefins margins reaching their lowest levels in more than a decade. He attributed margin pressure to a combination of global trade disruptions, subdued demand for durable goods, a lower oil-to-gas ratio, continued global capacity additions, and in Europe, higher energy costs and increased competition from imports.
Full-year results: $2.3B cash from operations, $2.5B EBITDA
For full-year 2025, the company reported:
- Cash from operations: $2.3 billion
- Cash conversion ratio: 95% (management cited a long-term target of 80%)
- EBITDA: $2.5 billion
- Earnings: $1.70 per diluted share
Vanacker and CFO Agustin Izquierdo said performance reflected working capital discipline, cost management, and safe and reliable operations. Izquierdo noted that working capital execution released over $1 billion in the fourth quarter alone, helping the company finish 2025 with $3.4 billion of cash and short-term investments and $8.1 billion of available liquidity.
Cash improvement plan beats 2025 target; 2026 goal raised
Izquierdo said the company exceeded its 2025 cash improvement plan target, conserving $800 million relative to its 2025 plan versus an original $600 million goal. He said the outperformance was driven in large part by a $400 million reduction in working capital relative to plan.
Management also highlighted a workforce reduction of 7% (about 1,350 employees), bringing headcount to about 18,700 at year-end, which Vanacker described as a lean organization.
Looking ahead, Izquierdo said LyondellBasell expects to deliver an additional $500 million of incremental cash in 2026 relative to 2025 actuals, raising the cumulative cash improvement target to $1.3 billion through the end of 2026. Management said the target excludes any potential benefits from the planned European asset sale.
Strategic updates: European divestitures, MoReTec-1, and Value Enhancement Program
Vanacker reiterated the company’s three-pillar strategy and said LyondellBasell is adjusting the timing of some initiatives to reflect current market conditions.
On the portfolio front, management said it has made “material progress” on the divestment of four European assets, and remains on track to complete the transaction in Q2 2026. Kim Foley, executive vice president of Global Olefins and Polyolefins, said regulatory reviews, work council consultations, and transition planning are progressing as expected.
On circular and low-carbon solutions, Vanacker said construction of MoReTec-1 is progressing and remains on track for a 2027 startup. He added that the company has materially reduced capital spending plans for circular solutions and is prioritizing markets with supportive regulation and proven demand, citing Europe as an example.
Management also highlighted progress in its Value Enhancement Program (VEP). Vanacker said VEP achieved $1.1 billion of recurring annual EBITDA in 2025, exceeding the original target. The company is extending the program and now targets $1.5 billion of recurring annual EBITDA by 2028, with the benefits expected to become more visible once volumes and margins recover.
Fourth-quarter segment performance and 2026 outlook items
In the fourth quarter, the company reported $417 million of EBITDA, with management citing typical year-end seasonality, elevated feedstock and energy costs, and maintenance downtime in the U.S. and Europe. The quarter included $61 million of identified items (net of tax) largely related to closure costs for the Dutch joint venture and the APS Specialty Powders business. Management also noted non-cash LIFO inventory valuation charges reduced results, partially offset by lower bonus accruals, for a net quarterly impact of $52 million.
By segment, the company reported:
- Olefins & Polyolefins Americas: Q4 EBITDA of $164 million, down sequentially on higher feedstock costs, lower polyethylene margins, and planned/unplanned maintenance. The segment operated at ~75% in Q4, with crackers at ~90%. Foley said Q1 conditions—tight inventories, reduced supply due to Winter Storm Fern, and seasonal demand—support polyethylene price increase initiatives, and the segment expects ~85% operating rates in Q1.
- Olefins & Polyolefins Europe, Asia, and International: Q4 EBITDA loss of $61 million, pressured by seasonality, maintenance, weaker demand, and import competition in Europe. Foley said the business reduced rates to align inventories with demand, generating positive cash flow despite the loss. For Q1, European assets are expected to operate at ~75%, and the segment has no major turnarounds scheduled in 2026.
- Intermediates & Derivatives: Q4 EBITDA of $205 million. Aaron Ledet said oxyfuels margins stayed stronger early in the quarter due to industry outages, while acetyls results were affected by a turnaround at La Porte. He said additional January downtime at La Porte is expected to reduce Q1 EBITDA by about $20 million. The segment ran ~75% in Q4 and plans ~85% in Q1.
- Advanced Polymer Solutions: Q4 EBITDA of $38 million, with lower volumes on seasonal patterns and softer automotive production. EVP Torkel Rhenman said APS delivered 55% higher EBITDA year-over-year and improved cash generation, citing commercial execution and cost discipline.
- Technology: Q4 EBITDA of $80 million as catalyst demand strengthened and more licensing milestones were recognized as revenue. Vanacker said Q1 results are expected to trend lower as fewer licensing revenue milestones are anticipated, which he framed as consistent with reduced global investment in new petrochemical capacity at the bottom of the cycle.
For 2026, Izquierdo said the company expects capital expenditures of about $1.2 billion, including roughly $400 million for profitable growth and $800 million for sustaining investments. In Q&A, management said the maintenance figure reflects a lighter turnaround year and is not necessarily a long-term run-rate. Izquierdo also said the company expects a 2026 effective tax rate of about 10%, with a cash tax rate about 10 percentage points higher.
In Q&A, Vanacker addressed questions on the dividend, saying the company continues to prioritize an investment-grade balance sheet and that dividend decisions are reviewed regularly by the board, with the next meeting in February. He also said the plan for the former Houston refinery site remains to transform it over time, noting the company avoided significant turnaround capital by shutting down the refinery. Management additionally said some working capital is expected to rebuild during 2026, though it has been incorporated into the cash improvement plan.
About LyondellBasell Industries (NYSE:LYB)
LyondellBasell Industries N.V. (NYSE: LYB) is a global chemical company headquartered in Houston, Texas, that specializes in the production of polyolefins and advanced polymers. Through its extensive portfolio, the company supplies raw materials for a wide range of end markets, including packaging, automotive, construction, electronics and consumer goods. By combining proprietary process technologies with expertise in catalysts, LyondellBasell aims to deliver value-added solutions that enhance product performance and sustainability.
The company’s integrated operations encompass the manufacture of olefins and polyolefins, advanced polymer products, chemical intermediates and refining activities.
