LyondellBasell Navigates 'Deepest Downturn' with Cost Cuts and Strategic Shifts Amid Trade Volatility

HOUSTON — April 25, 2025 — LyondellBasell Industries N.V. (NYSE: LYB) today reported first-quarter earnings against a backdrop of persistent market weakness and escalating trade tensions, outlining decisive steps to preserve cash and emerge stronger from an industry trough CEO Peter Vanacker termed the "deepest and longest" of his career.

The company reported first-quarter EBITDA of nearly $600 million, with earnings of $0.33 per share. Profitability was impacted by a significant turnaround at its Channelview, Texas complex and a challenging demand environment. Despite this, cash returns to shareholders remained robust at approximately $500 million, supported by the ordinary dividend and opportunistic share repurchases.

Central to the company's response is a newly launched $500 million cash improvement plan (CIP) for 2025. This initiative targets a $100 million reduction in capital expenditures, a $200 million cut to working capital, and at least $200 million in additional fixed cost savings through organizational streamlining. "These are difficult but necessary decisions required by these challenging times," Vanacker stated during the earnings call.

The moves build upon a multi-year portfolio transformation. Since 2023, LyondellBasell has closed Italian polypropylene assets, sold its ethylene oxide and derivatives (EO&D) business, exited refining operations, and recently announced the closure of a Dutch propylene oxide joint venture. These actions have reduced annual fixed costs by approximately $300 million, net of one-time charges.

Trade policy volatility looms large over the outlook. Vanacker acknowledged that "tariff risk is at top of mind of everyone," but expressed confidence in the company's "robust global supply network." He noted that approximately 75% of the company's polyethylene and polypropylene polymers are sold in local markets, insulating them from direct tariff impacts. For the less than 10% of polyolefin volumes potentially exposed, the company highlighted its ability to shift supply between its cost-advantaged production sites in the U.S. and Saudi Arabia.

Amid the cost-cutting, LyondellBasell is proceeding with strategic growth projects, signaling a commitment to its long-term strategy. The company reached a final investment decision on its "Flex-2" project in North America, which will convert ethylene into higher-value propylene. The project, with an estimated mid-teens internal rate of return (IRR), is expected to start up in late 2028 and deliver roughly $150 million in annual EBITDA post-startup.

Furthermore, the company was awarded a new feedstock allocation in Saudi Arabia, paving the way for a potential 1.5 million metric ton ethylene cracker joint project with Sipchem that could start up as early as 2031.

Segment performance was mixed. The Olefins and Polyolefins (O&P) Americas segment saw EBITDA of $251 million, hampered by planned and unplanned downtime. The O&P Europe, Asia, and International segment showed a significant sequential improvement, generating $17 million in EBITDA with utilization rates climbing to 80%. The Advanced Polymer Solutions (APS) segment was a bright spot, with EBITDA of $46 million—triple the underlying profitability of the prior quarter.

Looking ahead, management expects typical seasonal demand improvements in the second quarter but remains cautious. "Signals of near-term market recovery remain muted," Vanacker said, though he expressed optimism about medium-term support from German stimulus measures for the European chemical sector.

Analyst and Investor Commentary:

"The focus on cash preservation is prudent, but the sheer scale of the new cost-cutting plan underscores how prolonged this downturn has become," said Michael Thorne, a portfolio manager at Horizon Capital Advisors. "The commitment to the dividend and selective buybacks provides shareholder comfort, but the real test will be the timing and strength of the eventual recovery."

"LyondellBasell's global footprint is its greatest asset right now," noted Dr. Anya Sharma, a chemical industry analyst at ClearView Research. "The optionality to move product flows between regions is a critical hedge in this trade environment. Their progress on circular projects like MoReTec also positions them well for regulatory tailwinds in Europe."

"Another quarter of weak results, another round of cost cuts. When does the strategy actually deliver growth for shareholders?" questioned Rick Carson, an independent investor and frequent commentator on industry forums. "They're shrinking the company while talking up a 'transformation.' Exiting businesses is easy; building profitable new ones in this climate is the hard part. The market needs to see proof that these 'upgraded' margins will ever materialize."

"The operational discipline is evident—converting 87% of EBITDA to cash over the past year is impressive in this environment," added Sarah Jensen, a senior equity research associate at a major bank. "The key takeaway is their insistence on not compromising the long-term strategy for short-term pain. Continuing with Flex-2 and MoReTec-1 shows they're playing the long game."