LyondellBasell Navigates Market Headwinds, Pivots to Circular Economy with Major Recycling Investments
November 1, 2024 – LyondellBasell Industries N.V. (NYSE: LYB) reported its third-quarter 2024 earnings today, revealing a mixed financial picture shaped by volatile energy markets and a decisive strategic pivot towards a circular and low-carbon future. The company posted earnings of $1.88 per share with EBITDA of $1.2 billion, driven by robust performance in its North American Olefins and Polyolefins segment but offset by significant margin compression in refining and oxyfuels.
CEO Peter Vanacker framed the quarter as one of disciplined execution amid turbulence. "Our teams navigated challenging conditions while remaining laser-focused on our long-term strategy," Vanacker stated on the earnings call. "We are not just weathering the cycle; we are actively reshaping our portfolio for sustainable value creation."
The standout narrative of the quarter was LyondellBasell's aggressive push into advanced recycling. In September, the company began construction of its first commercial-scale MoReTec plant in Wesseling, Germany—a project backed by a €40 million grant from the EU Innovation Fund and attended by German Chancellor Olaf Scholz. The facility, slated for a 2026 startup, will convert hard-to-recycle plastic waste into 50,000 metric tons annually of feedstock for new, high-quality polymers.
Perhaps more significant for its core U.S. operations is the planned transformation of its Houston refinery site, set to cease crude processing by Q1 2025. The company outlined plans to repurpose the 700-acre complex into a hub for circular and renewable solutions. The centerpiece is a proposed second, larger MoReTec unit (MoReTec-2) with double the capacity of the German plant. The plan involves retrofitting existing hydrotreaters to process recycled feedstocks, leveraging existing infrastructure for a lower-carbon footprint.
Financially, the company generated $670 million in operating cash flow for the quarter and maintained a strong balance sheet with $7.3 billion in available liquidity. CFO Michael McMurray emphasized a "laser-focus on robust long-term cash conversion," noting shareholder returns of nearly $1.8 billion over the past twelve months through dividends and buybacks.
Segment performance was a tale of two hemispheres. The Olefins & Polyolefins – Americas segment saw EBITDA rise 13% sequentially to $758 million, benefiting from low ethane costs and strong operational performance that mitigated impacts from Hurricane Beryl. In stark contrast, the European segment generated only $81 million in EBITDA, reflecting muted demand and high energy costs, while the Refining segment posted a $23 million EBITDA loss.
This divergence underscores the strategic rationale behind LyondellBasell's ongoing review of its European assets. Vanacker noted an industry-wide trend, stating, "This is the first time in my career I've seen not just talk, but actual capacity rationalization happening in Europe." The company aims to increase its portfolio of cost-advantaged assets from 60% to 70% by exiting refining and restructuring its European footprint.
The outlook for Q4 anticipates typical seasonal softening, but Vanacker expressed confidence in the company's trajectory. "2025 will be a pivotal transformational year for LYB," he concluded, pointing to the refinery exit, European asset review, and progress on circular economy investments as key milestones.
Market Voices: Analyst & Investor Reactions
Eleanor Vance, Sustainable Funds Analyst at GreenRock Capital: "LyondellBasell's MoReTec investments are a concrete step beyond pledges. The EU grant validates the technology's innovation, and repurposing the Houston refinery is a capital-efficient masterstroke. This is exactly the type of circular economy infrastructure the market has been demanding."
Marcus Thorne, Veteran Chemical Industry Analyst: "The numbers tell a familiar story: North America thrives on cheap gas, Europe struggles. LYB's strategy to double down on its strengths while building optionality in recycling is prudent. The key will be execution and whether the premium for circular polymers materializes as projected."
David Chen, Portfolio Manager at Axion Capital (via social media): "Enough with the 'transition' greenwashing. They're shutting a refinery because it's a money-loser, not to save the planet. These recycling projects are a rounding error in their CAPEX. Show me the billion-dollar EBITDA from 'Circular Solutions' before calling it a strategy. This is a petchem company playing ESG catch-up."
Rebecca Shaw, Materials Sector Specialist at Horizon Investments: "The granular detail on the Houston site transition is encouraging. They're not just walking away; they're leveraging unique assets like their hydrotreaters. This asset-light approach to entering the circular space de-risks the pivot. The 20%+ EBITDA growth in their Advanced Polymer Solutions segment, despite auto sector woes, also shows underlying operational resilience."