Breaking Down LyondellBasell Industries N.V. (LYB) Financial Health: Key Insights for Investors

Are you an investor keeping a close watch on the chemical industry? Wondering how LyondellBasell Industries N.V. (LYB), a global leader in chemicals and polymers, is navigating the current economic landscape? In 2024, the company generated $3.8 billion in cash from operating activities and returned $1.9 billion to shareholders through dividends and share repurchases. But with a net income of $1.4 billion, or $4.15 per share, and revenue of $40.302 billion, down 1.96% year-over-year, how healthy is their financial position? Dive in to uncover key insights into LYB's financial performance and strategic moves.

LyondellBasell Industries N.V. (LYB) Revenue Analysis

Understanding

Breakdown of Primary Revenue Sources:

LyondellBasell Industries N.V. (LYB) operates through several key business segments. A look into these segments helps understand where the company generates its revenue:

• Olefins and Polyolefins-Americas: This segment focuses on the production of ethylene and its co-products using raw materials like natural gas liquids and crude oil-based liquids. In the first nine months of 2024, approximately 75% of the raw materials used in North American crackers were ethane.
• Intermediates & Derivatives (I&D): This segment's EBITDA stood at $1.423 billion for the nine months ended September 30, 2024.
• Advanced Polymer Solutions (APS): This segment reported an EBITDA of $94 million for the nine months ended September 30, 2024, but experienced a loss of $174 million in the third quarter of 2024.
• Refining: The refining segment showed an EBITDA of -$12 million for the nine months ended September 30, 2024, and $369 million in the corresponding period of 2023.
• Technology: This segment contributed an EBITDA of $271 million for the nine months ended September 30, 2024.

Year-over-Year Revenue Growth Rate:

Analyzing the year-over-year revenue growth rate provides a picture of the company's financial trajectory. Here’s how

• The company's revenue for the twelve months ending December 31, 2024, was $40.302 billion, a 1.96% decline year-over-year.
• Annual revenue for 2023 was $41.107 billion, an 18.52% decrease from 2022.
• In 2022, the annual revenue was $50.451 billion, a 9.27% increase from 2021.

Contribution of Different Business Segments to Overall Revenue:

The contribution of each business segment to the overall revenue helps in understanding the key drivers of the company's financial performance. For the first nine months of 2024:

• Sales and other operating revenues for Olefins and Polyolefins-Americas stood at $8.779 billion.

Analysis of Any Significant Changes in Revenue Streams:

Significant changes in revenue streams can indicate strategic shifts or market impacts. Noteworthy points include:

• In the second quarter of 2024, $293 million.
• The company is focused on generating value-added growth, aiming to deliver $3 billion of incremental Normalized EBITDA by 2027. By the end of 2024, it had unlocked approximately $1.3 billion, primarily from new PO/TBA capacity and its Value Enhancement Program.
• 65% year-over-year in 2024.

Here is a table summarizing

For more detailed insights into Breaking Down LyondellBasell Industries N.V. (LYB) Financial Health: Key Insights for Investors

LyondellBasell Industries N.V. (LYB) Profitability Metrics

Analyzing LyondellBasell Industries N.V. (LYB)'s profitability involves examining its gross profit, operating profit, and net profit margins to understand its financial health and operational efficiency. These metrics provide insights into how effectively the company manages its costs and generates profit from its revenue. For additional context, you might find this resource helpful: Breaking Down LyondellBasell Industries N.V. (LYB) Financial Health: Key Insights for Investors.

Here's a breakdown of what each profitability metric entails:

• Gross Profit Margin: Reflects the percentage of revenue that exceeds the cost of goods sold (COGS). It indicates how efficiently a company manages its production costs.
• Operating Profit Margin: Measures the percentage of revenue remaining after deducting both the cost of goods sold and operating expenses. This margin illustrates a company's profitability from its core business operations before interest and taxes.
• Net Profit Margin: Represents the percentage of revenue that remains as net income after all expenses, including interest and taxes, are deducted. It's a comprehensive measure of overall profitability.

To provide a clear picture of LyondellBasell's profitability, let's consider some example data. Note that the following data is illustrative and should be replaced with actual figures from LyondellBasell's financial statements for an accurate analysis.

The trends in profitability over time can reveal whether LyondellBasell is improving its operational efficiency and cost management. Comparing these profitability ratios with industry averages helps to benchmark the company's performance against its peers. If LyondellBasell consistently outperforms its industry peers, it may indicate a competitive advantage.

The following table provides an illustrative comparison of LyondellBasell's profitability ratios against industry averages:

Effective cost management and favorable gross margin trends are vital for maintaining and improving profitability. Monitoring these aspects can provide insights into the company's ability to sustain its financial performance. Analyzing operational efficiency involves scrutinizing how well LyondellBasell manages its costs and if it can maintain or improve its gross margin trends.

LyondellBasell Industries N.V. (LYB) Debt vs. Equity Structure

Understanding how LyondellBasell Industries N.V. (LYB) finances its operations and growth involves analyzing its debt and equity structure. This includes examining the levels of debt the company carries, how it compares to its equity, and how these metrics stack up against industry standards.

As of December 31, 2024, LyondellBasell reported total debt of $9.6 billion. This total is comprised of both short-term and long-term debt obligations. Specifically, long-term debt was valued at $8.7 billion and short-term debt at $900 million.

Key metrics to consider include the debt-to-equity ratio, which provides insight into the extent to which a company is financing its operations with debt versus equity. LyondellBasell’s debt-to-equity ratio for the most recent quarter that ended December 31, 2024 is 1.64. This ratio is calculated by dividing the total liabilities by shareholder equity.

Recent activities such as debt issuances, credit ratings, or refinancing can significantly impact a company's financial health. In February 2024, LyondellBasell issued $750 million in aggregate principal amount of notes consisting of $400 million principal amount of its 5.000% notes due 2034 and $350 million principal amount of its 5.750% notes due 2054. These notes are senior unsecured obligations of the Company and rank equally in right of payment with all of its other existing and future senior unsecured indebtedness.

Balancing debt and equity is crucial for sustainable growth. Too much debt can increase financial risk, while too little debt might indicate missed opportunities for leveraging growth. LyondellBasell strategically manages its capital structure by:

• Maintaining a mix of debt and equity to optimize its cost of capital.
• Targeting specific credit ratings to ensure access to debt markets under favorable terms.
• Utilizing cash flow from operations to reduce debt and fund growth projects.

A comparison against industry standards provides valuable context. The chemical industry, in which LyondellBasell operates, generally has moderate debt levels due to the capital-intensive nature of the business. Companies often use debt to finance large-scale manufacturing facilities and research and development activities.

Here is a table summarizing key aspects of LyondellBasell's debt profile:

Understanding these elements is essential for investors looking to assess the financial stability and growth prospects of LyondellBasell.

Further insights into the company's investor profile can be found here: Exploring LyondellBasell Industries N.V. (LYB) Investor Profile: Who’s Buying and Why?

LyondellBasell Industries N.V. (LYB) Liquidity and Solvency

When evaluating the financial health of LyondellBasell Industries N.V. (LYB), understanding its liquidity position is crucial. Liquidity refers to the company's ability to meet its short-term obligations as they come due. Key metrics for assessing liquidity include the current and quick ratios, working capital trends, and an overview of cash flow statements.

The current ratio, calculated by dividing current assets by current liabilities, provides a general indication of liquidity. A ratio above 1 suggests that a company has more current assets than current liabilities, indicating a stronger ability to cover its short-term debts. The quick ratio, also known as the acid-test ratio, is a more conservative measure as it excludes inventory from current assets. This is because inventory may not be easily converted into cash. A higher quick ratio indicates better short-term liquidity.

Analyzing working capital trends involves examining the difference between a company's current assets and current liabilities over a period. Consistent positive working capital suggests a company is effectively managing its short-term resources. Declining working capital, on the other hand, may signal potential liquidity issues.

Cash flow statements provide a detailed view of how cash is generated and used by LyondellBasell Industries N.V. (LYB). These statements are divided into three main sections:

• Operating activities: This section reflects the cash generated from the company's core business operations. Trends in operating cash flow indicate the company's ability to generate cash from its primary activities.
• Investing activities: This section includes cash flows related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing activities: This section involves cash flows related to debt, equity, and dividends.

Below is a hypothetical overview of LyondellBasell Industries N.V. (LYB)'s cash flows (in millions of USD) for the fiscal year 2024:

Positive cash flow from operating activities is generally a positive sign, indicating that the company is generating sufficient cash from its core business to fund its operations. Negative cash flow from investing activities typically indicates that the company is investing in its future growth. Negative cash flow from financing activities may indicate that the company is paying down debt or returning capital to shareholders through dividends or share repurchases.

Potential liquidity concerns may arise if LyondellBasell Industries N.V. (LYB) consistently shows negative operating cash flow, declining working capital, or high levels of short-term debt. Conversely, strengths in liquidity would include strong current and quick ratios, positive working capital trends, and robust operating cash flow.

To gain further insights into LyondellBasell Industries N.V. (LYB)'s financial health, consider exploring this related resource: Breaking Down LyondellBasell Industries N.V. (LYB) Financial Health: Key Insights for Investors

LyondellBasell Industries N.V. (LYB) Valuation Analysis

To determine whether LyondellBasell Industries N.V. (LYB) is overvalued or undervalued, a multifaceted approach incorporating several key financial metrics and market indicators is essential.

Valuation Ratios:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of earnings. A lower P/E ratio might suggest undervaluation, while a higher P/E ratio could indicate overvaluation relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio can suggest that the stock is undervalued, as it implies that the market is valuing the company at less than its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares the total value of the company (including debt and equity) to its earnings before interest, taxes, depreciation, and amortization. It provides a more comprehensive valuation measure than P/E, especially when comparing companies with different capital structures.

Currently, up-to-date ratios are as follows:

Stock Price Trends: Analyzing the stock price movement over the past year, or longer, provides insights into market sentiment and investor confidence. Significant price appreciation might suggest that the stock is becoming overvalued, while a declining price could indicate undervaluation, assuming the company's fundamentals remain strong.

As of April 18, 2025, LyondellBasell Industries N.V. (LYB) has a current stock price of $105.14.

Dividend Yield and Payout Ratios:

• Dividend Yield: For income-focused investors, the dividend yield—annual dividend per share divided by the stock price—is a crucial valuation metric. A higher dividend yield can make a stock more attractive.
• Payout Ratios: The payout ratio, indicating the percentage of earnings paid out as dividends, helps assess the sustainability of dividend payments.

LyondellBasell Industries N.V. (LYB) has a dividend yield of approximately 4.42%. The annual dividend payout is $4.60.

Analyst Consensus: Monitoring analyst ratings and price targets offers a view on how Wall Street values the stock. A consensus of 'buy' ratings suggests optimism, while 'hold' or 'sell' ratings might indicate concerns about valuation or future performance.

Check out this related article: Exploring LyondellBasell Industries N.V. (LYB) Investor Profile: Who’s Buying and Why?

LyondellBasell Industries N.V. (LYB) Risk Factors

Understanding the risks facing LyondellBasell Industries N.V. (LYB) is crucial for investors. These risks can be categorized into internal and external factors that may impact the company's financial health.

Key risks include industry competition, regulatory changes, and overall market conditions. A comprehensive overview of these factors is often detailed in the company's annual 10-K report.

Here's a breakdown of some key risk areas:

• Industry Cyclicality and Volatility: The chemical industry is known for its cyclical nature, which can lead to significant fluctuations in LyondellBasell's operating results. The exit from the refining business by 2025 adds to this volatility.
• Competition: LyondellBasell competes with regional and multinational marketers and producers of plastic resins and compounds. Competition is based on product development, price, product quality, product delivery, reliability of supply, product performance and customer service.
• Raw Material and Energy Costs: Increased costs and supply limitations for raw materials and energy could lead to higher operating expenses and reduced liquidity. Feedstock costs represent 60-65% of total production expenses.
• Regulatory Risks: Changes in tax laws and environmental, health, and safety regulations could increase costs and operational restrictions.
• Market Risks: Fluctuations in currency exchange rates, economic instability, and trade restrictions in international markets can impact financial results. Slower global economic growth, particularly in China, could impact demand. Potential capacity additions may outpace demand, affecting industry dynamics.
• Operational Risks: Natural disasters, cybersecurity incidents, and other hazards can cause interruptions at facilities, leading to increased liabilities and lower operating results.
• Financial Risks: Limitations on access to credit markets could adversely affect operations, as the business is capital intensive. High energy costs and regulatory pressures pose challenges to margins.
• Climate Transition Risks: These include the financial exposures related to the EU Emissions Trading System (ETS). Initiatives to mitigate these risks include improving energy efficiency, transitioning to lower carbon-intensive fuels, and using carbon capture and reuse technologies. The cost of these initiatives is estimated at EUR 29 million, or USD 32 million annually.

In 2024, LyondellBasell faced several market headwinds, including soft global demand, rising raw material costs, and economic uncertainty. These factors pressured margins in the Olefins & Polyolefins and Intermediates & Derivatives segments. The Advanced Polymer Solutions segment also experienced limited margin recovery due to global declines in automotive production.

Despite these challenges, LyondellBasell is actively implementing mitigation strategies to strengthen its financial position and sustainability.

Examples of mitigation strategies and plans include:

• Strategic Initiatives: Focused on generating value-added growth to deliver $3 billion of incremental Normalized EBITDA by 2027. By the end of 2024, $1.3 billion of incremental Normalized EBITDA was unlocked.
• Circular and Low Carbon Solutions (CLCS): Achieved 65% year-over-year volume growth in 2024, with plans to produce and market 2 million metric tons of recycled and renewable-based polymers annually by 2030.
• Cost Management: The Value Enhancement Program (VEP) unlocked a cumulative $800 million in recurring annual EBITDA and reduced carbon emissions by an estimated 310,000 metric tons.
• Investment in Recycling Technologies: Construction of the first commercial-scale chemical recycling plant (MoReTec-1) in Germany.
• Refining Exit: The shutdown of refining operations at the Houston refinery in Q1 2025 is expected to reduce annual Scope 3 emissions by approximately 40 million metric tons.
• Renewable Energy: Securing new power purchase agreements (PPAs) in 2024 to meet the target of sourcing at least 50% of electricity from renewable sources by 2030.
• Balance Sheet Management: Maintaining a robust investment-grade balance sheet with $8.0 billion of available liquidity, including $3.4 billion in cash and cash equivalents at the end of 2024.

LyondellBasell is also addressing climate transition risks through various strategies. These include improving energy efficiency, transitioning to lower carbon-intensive fuels, electrifying process equipment, and capturing and reusing CO2. The company aims to achieve Carbon Neutrality by 2050, with interim targets of reducing Scope 1 and 2 emissions by 42% and Scope 3 emissions by 30% by 2030 (from a 2020 baseline). In 2024, approximately $400 million in capital expenditure was allocated to support these measures.

For more insights into LyondellBasell's financial health, check out: Breaking Down LyondellBasell Industries N.V. (LYB) Financial Health: Key Insights for Investors

LyondellBasell Industries N.V. (LYB) Growth Opportunities

LyondellBasell Industries N.V. (LYB) has several key growth drivers that include product innovations, strategic market expansions, and potential acquisitions. These elements collectively contribute to the company's future revenue growth and earnings potential.

Product innovation is a significant factor. LyondellBasell consistently invests in research and development to create new polymers and chemical solutions. These innovations address evolving customer needs and sustainability demands.

Market expansion, particularly in high-growth regions, also fuels growth. Expanding into emerging markets allows LyondellBasell to tap into new customer bases and increase its global footprint.

Strategic acquisitions can quickly enhance LyondellBasell's portfolio and market position. By acquiring complementary businesses, the company can integrate new technologies and expand its product offerings.

Future revenue growth projections and earnings estimates for LyondellBasell depend on various factors such as global economic conditions, raw material prices, and competitive pressures. However, analyst estimates provide a general outlook:

• Analysts predict a steady increase in revenue over the next few years, driven by increased demand for polymers and specialty chemicals.
• Earnings per share (EPS) are also expected to grow, supported by operational efficiencies and strategic investments.

Strategic initiatives and partnerships play a crucial role in LyondellBasell's growth trajectory. For example, collaborations with technology providers can accelerate the development and deployment of innovative solutions. Partnerships with other industry players can also expand market reach and create synergistic opportunities.

LyondellBasell possesses several competitive advantages that position it favorably for future growth:

• Scale and efficiency: As one of the world's largest plastics, chemicals, and refining companies, LyondellBasell benefits from economies of scale and efficient operations.
• Technological expertise: The company's strong focus on research and development enables it to develop differentiated products and maintain a competitive edge.
• Global presence: LyondellBasell's operations span multiple continents, providing access to diverse markets and reducing geographic risk.

For insights into the company's guiding principles, refer to Mission Statement, Vision, & Core Values of LyondellBasell Industries N.V. (LYB).