LyondellBasell Navigates Prolonged Downturn with Strategic Cash Preservation and Portfolio Reshaping
August 1, 2025 — LyondellBasell Industries N.V. (NYSE: LYB) reported second-quarter earnings amidst what CEO Peter Vanacker described as "the longest downturn in my 35 years in the industry." The global chemical giant posted earnings of $0.62 per share with EBITDA of $715 million, highlighting a quarter of sequential improvement driven by lower feedstock costs and reduced operational downtime. However, the broader narrative centered on the company's aggressive maneuvers to preserve cash and strategically reposition its global footprint for a future market rebound.
In a detailed earnings call, executives outlined a multi-pronged "cash improvement plan" now targeting $600 million in incremental cash flow for 2025, up from an initial $500 million goal. Key actions include a $200 million reduction in working capital, $200 million in fixed cost savings through organizational streamlining, and a significant pullback in capital expenditures. The company has lowered its 2025 CapEx guidance to $1.7 billion, a $200 million cut, and plans to reduce 2026 spending to $1.4 billion, largely by deferring the construction of its Flex-2 project.
"Our sharp focus on cash conversion, disciplined investments, and strategic portfolio management are key to successfully navigating this prolonged downturn," stated Vanacker. He emphasized that the company's liquidity remains strong at $6.35 billion, with a commitment to maintaining its investment-grade credit rating as the "foundation" of its capital allocation strategy.
A cornerstone of the strategic shift is the ongoing optimization of LyondellBasell's European portfolio, a region challenged by high feedstock costs and insufficient regulatory support. The company confirmed the proposed sale of four European Olefins & Polyolefins assets, a move expected to reduce recurring regional costs. The strategy in Europe will increasingly pivot towards circular and renewable feedstocks, exemplified by the MoReTec-1 chemical recycling plant under construction in Germany.
Conversely, the company is reinforcing its presence in structurally advantaged regions like North America and the Middle East, where access to low-cost natural gas liquids supports stronger returns. By the start of the next decade, LyondellBasell expects over 70% of its capacity to be located in these cost-advantaged areas.
Segment performance was mixed. The Olefins & Polyolefins (O&P) Americas segment showed strength, with EBITDA jumping more than 25% sequentially to $318 million, buoyed by a successful June polyethylene price increase and resilient packaging demand. The Intermediates & Derivatives segment also saw improvement. However, the Advanced Polymer Solutions segment continues to face headwinds from sluggish automotive and construction markets.
Looking ahead, management expressed cautious optimism for the third quarter, expecting benefits from the completed Channelview turnaround and recent pricing momentum in key products, though oxyfuels and licensing markets are expected to remain weak.
Market Voices: Analyst & Investor Reactions
Michael Chen, Portfolio Manager at Horizon Capital: "LYB's discipline is commendable. In a cycle this deep, survival and positioning for the upturn are everything. Deferring Flex-2 and MoReTec-2 isn't a retreat from growth; it's a tactical pause that preserves precious capital and optionality. Their fortified balance sheet will be a massive advantage when the cycle finally turns."
Sarah Jennings, Senior Analyst at ClearView Research: "The European asset sale is a logical, if belated, step. The region's structural disadvantages are not a cyclical problem. Redirecting resources to circular solutions in Europe and doubling down on the Gulf Coast and Middle East is the right long-term playbook. The key question is execution speed and whether the circular economy can achieve scale profitability fast enough."
David R. Miller, Managing Partner at Steel Peak Investments (via social media): "Enough with the 'prudent capital allocation' talk. Shareholders have endured a brutal downturn while the board raised the dividend to unsustainable levels just last year. Now they're halting buybacks and scrambling to cut costs? This feels reactive, not strategic. The 'portfolio transformation' seems like selling assets at a low point and calling it a win. Where's the visionary leadership?"
Priya Sharma, Chemicals Specialist at GreenRock Advisors: "The delay on MoReTec-2 is telling. It signals that even with attractive pyrolysis margins, brand owner commitments for circular plastics aren't materializing as quickly as hoped in North America. LYB is wise to wait for firm offtake agreements. This underscores that the circular transition, while inevitable, will be lumpy and region-specific, with Europe leading via regulation."