Q4 2023 LyondellBasell Industries NV Earnings Call

Operator: Hello, and welcome to the Lyondell Basell presentation by LyondellBasell Industries NV, This Recorded for Instant Replay. Following today's presentation, we will conduct a question and answer session. I would now like to turn the call over to David Kinney, Head of Investor Relations. Sir, you may.

Hello, and welcome to the Lyondellbasell teleconference. At the request of Lyondellbasell. This conference is being recorded for instant replay purposes.

Following today's presentation, we will conduct a question and answer session I would now like to turn the call over to Mr. David Kinney head of Investor Relations, Sir you may begin.

David Kinney: Thank you, operator. Before we begin the discussion, I would like to point out that a slide presentation accompanies today's call and is available on our website at www.lyondellbasell.com slash investor relations. Today we will be discussing our business results while making reference to some forward-looking statements and non-GAAP financial measures. We believe the forward-looking statements are based upon reasonable assumptions, and the alternative measures are useful to investors.

David Kinney: Thank you operator before we begin the discussion I would like to point out that a slide presentation accompanies today's call and is available on our website at www Dot Lyondellbasell Dotcom Slash Investor Relations.

David Kinney: Today, we will be discussing our business results, while making reference to some forward looking statements and non-GAAP financial measures.

We believe the forward looking statements are based upon reasonable assumptions and the alternative measures are useful to investors.

David Kinney: Nonetheless, the forward-looking statements are subject to significant risk and uncertainty. We encourage you to learn more about the factors that can lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are also available on our investor relations website. Comments made on this call will be in regard to our underlying business results using non-GAAP financial measures, such as EBITDA and earnings per share, excluding identified items. Additional documents on our investor website provide reconciliations of non-GAAP financial measures to GAAP financial measures together with other disclosures, including the earnings release and our business results discussion. A recording of this call will be available by telephone beginning at 1 p.m. Eastern Time today until March 2nd by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The access code for both numbers is 137-420-56.

David Kinney: Nonetheless, the forward looking statements are subject to significant risks and uncertainty.

David Kinney: We encourage you to learn more about the factors that could lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are also available on our Investor Relations website.

Comments made on this call will be in regard to our underlying business results using non-GAAP financial measures such as EBITDA and earnings per share excluding identified items additional documents on our investor website provide reconciliations of non-GAAP financial measures to GAAP financial measures together with other disclosures, including the earnings release and our business results discussed.

David Kinney:

David Kinney: A recording of this call will be available by telephone beginning at one P. M. Eastern time today until March 2nd by calling 870 76606853 in the United States and 20161 to 7415 outside the United States. The access code for both numbers is 137.

David Kinney: For 2056.

David Kinney: Joining today's call will be Peter Vaneker, LyondellBasell's Chief Executive Officer, our CFO, Michael McMurray, Ken Lane, our Executive Vice President of Global Olepins and Polyolepins, Kim Foley, our EVP of Intermediates and Derivatives and Refining, and Torkel Rehman, our EVP of Advanced Polymer Solutions. During today's call, we will We will also discuss current market dynamics and our near-term outlook. With that being said, I would now like to turn the call over to Peter. Thank you, Dave, and welcome to all of you.

David Kinney: Joining today's call will be Peter Vanacker, Windup sells chief Executive Officer, our CFO, Michael Mcmurray, Ken Layne, our executive Vice President of Global Olefins <unk> Polyolefin.

Tim Foley R E V P of intermediates and derivatives and refining and torque hold renmin, our EVP of advanced polymer solutions.

David Kinney: During today's call, we will focus on fourth quarter and full year 2023 results, including an update on <unk> strategic progress.

David Kinney: We will also discuss current market dynamics and our near term outlook.

David Kinney: But that being said I would now like to turn the call over to Peter.

Dave and welcome to all of you. We appreciate you joining us today as we discuss our fourth quarter and full year 2023 results.

Peter Vaneker: We appreciate you joining us today as we discuss our fourth quarter and full year 2023 results. Let's begin, as we always do, with our safety results on slide three. During 2023, our employees and contractors demonstrated their commitments to outstanding safety performance. LYB's total recordable injury rate was 0.14, which is approximately 20% lower than the average of the prior three years.

Peter Vanacker: Let's begin as we always do with safety results in slide three.

Peter Vanacker: During 'twenty twenty-three or employees and contractors demonstrated their commitment to outstanding safety performance.

Peter Vanacker: <unk> total recordable injury rate was zero point, 14, which is approximately 20% lower than the average of the prior three years.

Peter Vaneker: I want to congratulate our APS segment, where injuries were 38% lower than in 2022, a significant improvement from historical levels. We always view safety performance as a leading indicator of operational excellence and business performance. But there is no greater value than seeing every member of our team return home to their families every day in the same condition as when they began their working day. Let's now turn to slide four to discuss our financial results. 2023 was another challenging year for petrochemicals. While energy prices moderated in an environment of geopolitical unrest, markets were extremely cautious due to uncertainty about inflation and the potential for a more pronounced downturn in economic activity. However, reported GDP growth in the U.S. and China improved relative to 2022. The growth in petrochemicals was far below the norms for our industry.

I want to congratulate our Aps segment, where things your east were 38% lower than 2022.

Peter Vanacker: Significant improvement from historical levels.

We always use safety performance is a leading indicator of operational excellence and business performance.

Peter Vanacker: But there is no greater value than seeing every member of our team return home to their families. Every day in the same health has when they began to work down working day.

Peter Vanacker: So turning to slide four to discuss our financial results.

Peter Vanacker: 2023 was another challenging year for petrochemicals.

Peter Vanacker: When energy prices moderate it's in an environment of geopolitical unrest markets, we're extremely cautious.

Peter Vanacker: No to uncertainty about inflation.

Peter Vanacker: The potential for a more pronounced downturn in economic activity.

Peter Vanacker: Reported GDP growth in the U S and China improved relative to 2022.

Peter Vanacker: Rose and petrochemicals was far below norms for our industry.

Peter Vaneker: Against that backdrop, LYB delivered earnings of $8.65 per share with an EBITDA of $5.2 billion. Cash generation was exceptional and resulted in $4.9 billion of cash from operations. We have a highly efficient cash conversion ratio of 98%. We ended the year with $7.6 billion of liquidity, supported by a strong investment-grade balance sheet. And we exceeded our cost of capital with an 11% return on invested capital. In March of last year, we successfully launched our new strategy at our Capital Markets Day in New York. Now let's turn to slide five and briefly review this strategy.

Peter Vanacker: Against that backdrop, Hello, I be delivered earnings of $8.65 per share with an EBITDA of $5 $2 billion.

Peter Vanacker: Cash generation was exceptional and resulted in $4 $9 billion of cash from operations.

Peter Vanacker: We have a highly efficient cash conversion ratio of 98%.

Peter Vanacker: We ended the year with $7.6 billion of liquidity supported by a strong investment grade balance sheet.

Peter Vanacker: And we exceeded our cost of capital with an 11% return on invested capital.

Peter Vanacker: In March of last year, we successfully launched our new strategy at our capital markets Day in New York now, let's turn to slide five and briefly review this strategy.

Peter Vaneker: Our goal was to create focus, clarity, and alignment about the direction Lyondell-Basell would be moving over the next five years and provide a clear vision of what the company would look like in 2027. Our strategy is built around three pillars, growing and upgrading the core, building a profitable circular and low carbon solutions business, and stepping up performance and culture. In growing and upgrading the core, we are investing in businesses that fit with our competitive advantages and long-term strategies. Our circular and low carbon solutions business is driving leadership in circularity and addressing the massive demand for these products from our customers and society.

Peter Vanacker: Our goal was to create focus clarity and alignment about their direction lineup of zelle, we'd be moving over the next five years.

Peter Vanacker: And provides a clear vision of what.

Peter Vanacker: The company would look like in 2027.

Peter Vanacker: Yeah.

Peter Vanacker: Our strategy is built around three pillars growing and upgrading to core <unk>.

Peter Vanacker: Building, a profitable circular and low carbon solutions business and stepping up performance and culture.

Peter Vanacker: In growing and upgrading to court, we are investing in businesses that fit with our competitive advantages and long term strategy.

Peter Vanacker: Or circular and low carbon solutions business is driving leadership in circularity and addressing the massive demand for these products from our customers and society.

Peter Vaneker: In the third pillar, we are transforming the culture of LYB to embed a more comprehensive view of value creation while continuing to recognize that stringent cost management is vital in our industry. On slide six, we highlight our progress on our strategy in 2023 and the work underway over the next few years towards our 2027 goals. In just 10 months since launching our strategy last March, LyondellBasell has unlocked nearly one third of the $3 billion of incremental normalized EBITDA that we are targeting for 2027. The successful startup of the POTBA plant this year is a major step forward in growing and upgrading our core by adding approximately $450 million to our normalized EBITDA. And I am very pleased to report that our value enhancement program is far exceeding our initial expectations.

Peter Vanacker: In the third pillar, we are transforming the culture of L Y B two embeds, a more comprehensive view of value creation, while continuing to recognize that stringent cost management is a vital and our industry.

On slide six we highlight our progress on our strategy in 2023 and the work underway over the next few years towards our 2027 goals.

Peter Vanacker: And just 10 months since launching our strategy last March lineup of Zelle has unlocked nearly one third of the $3 billion of incremental normalized EBITDA that we are targeting for 2027.

Peter Vanacker: The successful startup of the P. O TBA plant. This year is a major step forward in growing and upgrading our core by adding approximately $450 million to our normalized EBITDA.

Peter Vanacker: And I'm very pleased to report that they weren't a value enhancement program, it's far exceeding our initial expectations.

Peter Vaneker: In 2023, the VEP achieved a year-end run rate of more than $400 million of mid-cycle recurring annual EBITDA improvement, and Michael will share more details on the progress of the VEP in a few moments. As shown on the slide, we have numerous work streams underway to build towards our strategic goals of $2 billion of incremental normalized EBITDA by 2025 and a total of $3 billion by 2027. With the announced sale of the ethylene oxide and derivatives business to Ineos for $700 million, we are redirecting resources away from non-core businesses. The deal we announced in January to acquire 35% of net bets in Saudi Arabia for approximately $500 million is just one example of how we are growing our core cost-advantaged olefins and polyolefins businesses.

Peter Vanacker: In 2023 D E. P achieved a year end run rate of more than $400 million of mid cycle recurring annual EBITDA improvement.

Peter Vanacker: We will share more details on the progress of the V. P. In a few moments.

As shown on the slide we have numerous work streams underway to built to work our strategic goals of $2 billion of incremental normalized EBITDA by 2025.

Peter Vanacker: And a total of $3 billion by 2027.

Peter Vanacker: With the announced sale of the ethylene oxide and derivatives business to Ineos for $700 million, we are redirecting resources away from noncore businesses.

Peter Vanacker: The deal we announced in January to acquire 35% of net pets in Saudi Arabia for approximately $500 million. That's just one example of how we are growing or core cost advantaged olefins <unk> polyolefin businesses.

Peter Vaneker: We're making great strides and building strong foundations for our circular and low carbon solutions business. In 2023, we took a final investment decision for our first launch of advanced recycling capacity in Germany using our proprietary catalytic moiretic technology. And we are building partnerships to source waste plastic to supply your app in Germany, while also securing waste plastic in Houston to supply our next investment in advanced recycling capacity. And the VEP program is not a one-time initiative.

Peter Vanacker: We're making great strides in building strong foundations for Oh, a circular and low carbon solutions business.

Peter Vanacker: In 2023, we took a final investment decision for our first tranche of advanced recycling capacity in Germany, using or appropriate Terry catalytic Moray take technology.

And we are building partnerships to source waste plastic to supply your app in Germany.

Peter Vanacker: While also securing waste plastic in Houston to supply our next investment and advanced recycling capacity.

And if he E. P program is not a one time initiatives.

Peter Vaneker: Michael will describe our increased targets for 2024 and beyond. While we have a lot of work ahead of us, I want to congratulate our team on the substantial progress we achieved on our strategic journey in 2023, ensuring a robust platform for longer-term value creation and positive leverage on any market turnaround. On slide seven, we take a look at the steps ahead to deliver on our goals. We will continue to grow and upgrade our core businesses by focusing on advantaged feedstocks in growing markets, where LYB can build or extend its leading market position. Our new joint venture in Saudi Arabia is one example of how we will do this.

Peter Vanacker: Michael will describe or increased targets for 2024 and beyond.

Peter Vanacker: Why do we have a lot of work ahead of us I want to congratulate our team on the substantial progress we achieved on our strategic journey in 2023.

Peter Vanacker: Ensuring a robust platform for longer term value creation and positive leverage to any market turnarounds.

On slide seven let's take a look at the steps ahead to deliver on our goals we.

Peter Vanacker: We will continue to grow and upgrades or corner businesses by focusing on advantaged feedstocks and growing markets, where <unk> can build or extend our leading market position.

Our new joint venture in Saudi Arabia is one example of how we will do this.

Peter Vaneker: As we add new positions, we will continue to review our portfolio for businesses and assets that are not aligned with our long-term strategy. The divestiture of EO and derivatives business, the sale of our Australian polypropylene business, the shutdown of a polypropylene line in Italy, and the exit of the refining business are all examples of how we are sharpening the focus of our business portfolio. The rapid progress of the LYB value enhancement program also contributes to our growth through low-cost capacity and productivity improvements. We're making good progress on building the foundations for our circular and low carbon solutions business as we work towards our goal of $500 million of incremental EBITDA by 2027 and 1 billion dollars by 2030. And our VEP is not only delivering growth and productivity; the VEP also supports the third pillar of our strategy to step up performance and culture by instilling a value-based mindset across the company, with numerous initiatives to improve margins through customer and commercial excellence embedded in the VEP. And our work to transform our advanced polymer solutions business is also an important part of our work to step up performance and culture. All of our progress is supported by our foundation of efficient cash generation.

Peter Vanacker: As we add new positions, we will continue to review our portfolio for our businesses and assets that are not aligned with our long term strategy.

Peter Vanacker: The divestiture of evil and derivatives business the sale of our Australian polypropylene business the shut down of our polypropylene line, Italy and the exit of the refining business are all examples of how we are sharpening the focus of our business portfolio.

Peter Vanacker: The rapid progress of the LOI be value enhancement program also contributes to our growth through low cost capacity bottlenecks and productivity improvements.

Peter Vanacker: We're making good progress on building the foundations for our circular and low carbon solutions business as we work towards our goal of $500 million of incremental EBITDA by 2027.

Peter Vanacker: And $1 billion by 2030.

Peter Vanacker: And at what E. P is not only delivering growth and productivity. The V. P. Also supports the third pillar of our strategy to step up performance and culture by instilling a value based mindset across the company.

Peter Vanacker: We have numerous initiatives to improve margins through customer and commercial excellence embedded into V E P.

Peter Vanacker: And our work to transform or advanced polymer solutions business is also an important part of what we're going to step up performance and culture.

Peter Vanacker: All of our progress is supported by how our foundations of efficient cash generation.

Michael C. McMurray: Disciplined Capital Allocation and our Investment Grade Balance Sheet. We're leveraging partnerships where it fits to achieve growth with capital efficiency, and we're pursuing a very value-focused investment program. And we remain steadfast in our support for a secure, competitive, and growing dividend as part of our commitment to competitive shareholder return. Now, I will turn the call over to Michael to discuss the details of our financial progress. Thank you, Peter. And good morning, everyone.

Peter Vanacker: Disciplined capital allocation.

Peter Vanacker: And our investment grade balance sheet.

Peter Vanacker: We're leveraging partnerships, where it fits to achieve growth with capital efficiency.

And we're pursuing a very value focused investment program.

Peter Vanacker: And we remain steadfast in our support for a secure competitive and growing dividend.

Part of our commitment to competitive shareholder returns.

Peter Vanacker: And now I will turn the call over to Michael to discuss the details of our financial progress.

Michael McMurray: Thank you Peter and good morning, everyone. Please turn to slide eight and let's take a look at the progress of our value enhancement program.

Michael C. McMurray: Please turn to slide eight. And let's take a look at the progress of our value enhancement program. As Peter mentioned, LYB's value enhancement program far exceeded our initial expectations in 2023. When we launched the program, we thought we could achieve a 2023 year-end run rate of $150 million of mid-cycle recurring annual EBITDA improvement. With high engagement and rapid execution, our team achieved a run rate of more than $400 million by year in 2023. We have a strong management system in place for our VEP program. Our team has screened more than 13,000 ideas, and more than 1900 of these ideas have advanced to the execution-ready stage of our process. By the end of 2023, we will execute on approximately 450 of these initiatives. Our system is robust and disciplined, and our internal and external auditors have validated our processes.

Michael: As Peter mentioned these value enhancement program far exceeded our initial expectations in 2023.

Michael: When we launched the program we thought we could achieve a 2023 year end run rate about $150 million of mid cycle recurring annual EBITDA improvement with.

Michael: With high engagement and rapid execution, our team achieved a run rate of more than $400 million by year end 2023 weeks.

Michael: We have a strong management system in place for our V. P program. Our team has screened more than 13000 ideas and more than 1900 of these ideas have advanced to the execution ready stage of our process.

Michael: By the end of 2023, we executed on approximately 450 of these initiatives our system is robust and disciplined and our internal and external auditors have validated our processes.

Michael C. McMurray: We currently believe this effort will add a total of $600 million of recurring annual EBITDA by the end of 2024 and up to $1 billion by the end of 2025. This is a significant increase from our initial target of $750 million that we announced last March, driven by the enthusiastic buying of our colleagues and the tangible results that we have delivered so far. The LYB Value Enhancement Program is providing meaningful contributions to our strategic financial goals and will continue to do so as we move forward. On slide 9, let me share more details about the progress on our VEP program during 2023. Our targets for the program are described as year-end run rates relative to 2021 volumes and using average margins from 2017 to 2019, a time period that provides a good approximation of mid-cycle margins.

Michael: We currently believe this effort will add a total of $600 million.

Michael: Recurring annual EBITDA by the end of 'twenty, 'twenty, four and up to $8 billion by the end of 2025. This is a significant increase from our initial target of $750 million that we announced last March driven by the enthusiastic by of our colleagues and the tangible results that we have delivered.

Michael: So far.

Michael: The L Y P value enhancement program is providing meaningful contributions to our strategic financial goals and we will continue to do so as we move forward.

Michael: On slide nine let me share more details about the progress on our V. P program during 2023.

Michael: Our targets for the program are described as year end run rates relative to 2021 volumes and using average margins from 2017 to 2019, a time period that provides a good approximation of mid cycle margins.

Michael C. McMurray: Through more than 450 initiatives, we generated over $300 million of VEP EBITDA from the program based on 2023 margins. This reflects the net recurring improvements throughout the year relative to 2021 volume, product mix, and cost. Now, let me highlight a few of the initiatives from last year. At our Lake Charles Integrated Polyethylene Joint Venture, we automated controls for a water treatment unit that reduced manual operations and water consumption.

Michael: Through more than 450 initiatives, we generated over $300 million of the E. P. EBITDA from the program based on 2023 margins. This reflects the net recurring improvements throughout the year relative to 2021 volume product mix and cost.

Speaker Change: Now, let me highlight a few of the initiatives from last year.

Speaker Change: At our Lake Charles integrated polyethylene joint venture, we automated controls for our water treatment unit that reduced manual operations and water consumption with a small investment we were able to reduce L Y b share of cost by $800000 annually.

Michael C. McMurray: With a small investment, we were able to reduce LYB's share of cost by $800,000 annually. In our oxyfuels business, our cost-advantaged U.S. production is exported in vessels to markets around the world. We worked with one of our terminal providers to encourage their investment in a vapor recovery system that allowed LYB to double vessel loading rates to reduce demerge costs and vapor emissions for a net recurring benefit of $1 million per year. By investing resources to learn more about the needs of our customers, our polymer product development team allocated resources for new products to serve demanding applications and wire and cable sheathing for subsea infrastructure markets. This initiative improved recurring profitability by at least $300,000 per year. We hope these examples provide you with some insight into the hundreds of small initiatives that we expect to add up to $1 billion of mid-cycle recurring annual EBITDA to LYB's run rate by the end of 2025. Please turn to slide 10 and let me begin by highlighting the outstanding cash generation from our business portfolio in 2023. LYB generated a total of $4.9 billion of cash from operating activities over the past year. Cash on hand increased to $3.4 billion at the end of the fourth quarter.

Speaker Change: And our oxy fuels business, our cost advantage U S production is exported and vessels to markets around the world. We worked with one of our terminal providers to encourage their investment and the vapor recovery system that allowed <unk> to double that so loading rates to reduce demurrage costs and de permissions.

Speaker Change: For our net recurring benefit of $1 million per year.

Speaker Change: By investing resources to learn more about the needs of our customers our polymer product development teams allocated resources for new products to serve demanding applications and wire and cable sheathing for subsea infrastructure markets. This initiative improve recording profitability by at least $300000 per year.

Speaker Change: <unk>.

We hope these examples provide you with some insight into the hundreds of small initiatives that we have that we expect to add up to $1 billion of mid cycle recurring annual EBITDA to <unk> run rate by the end of 2025.

Speaker Change: Please turn to slide 10, and let me begin by highlighting the outstanding cash generation from our business portfolio during 2023.

Speaker Change: Al why be generated a total of $4 $9 billion of cash from operating activities over the past year.

Speaker Change: Cash on hand increased to $3 4 billion at the end of the fourth quarter.

Michael C. McMurray: During 2023, we achieved cash conversion of 98%, well above our long-term target of 80%. Our cash conversion was bolstered by a working capital reduction of approximately $700 million during the fourth quarter. The majority of the working capital benefit was from lower receivables and inventories. However, we expect our working capital needs will increase during the first quarter. Our fishing cash generation allowed the company to return more than $1.8 billion to LyondellBasell shareholders in 2023. This represents 53 percent of our $3.4 billion of free cash flow for the year.

Speaker Change: During 2023, we achieved cash conversion of 98% well above our long term target of 80%.

Speaker Change: Our cash conversion was bolstered by working capital reduction of approximately $700 million during the fourth quarter.

Speaker Change: The majority of the working capital benefit was from lower receivables and inventories.

Speaker Change: We expect our working capital needs will increase during the first quarter.

Speaker Change: Our efficient cash generation allowed the company to return more than $1 $8 billion to Lyondellbasell shareholders. In 2023. This represents 53% of our $3.4 billion of free cash flow for the year.

Michael C. McMurray: Let's continue with slide 11 and review the details of our capital allocation over the past year. As Peter mentioned, we are committed to disciplined capital allocation as we execute our strategy and maintain our robust investment grade balance sheet. During 2023, Cash From Operating Activities fully funded $1.6 billion in dividends, $210 million in share repurchases, and our capital investment program. In May, we increased our quarterly dividend by 5%, marking the 13th consecutive year of annual dividend growth. This year, we invested $1.5 billion in capital expenditures.

Speaker Change: Let's continue with slide 11, and review the details of our capital allocation over the past year.

Speaker Change: As Peter mentioned, we are committed to disciplined capital allocation as we execute our strategy and maintain our robust investment grade balance sheet.

Speaker Change: Turning 2023 cash from operating activities fully funded $1 $6 billion in dividends $210 million in share repurchases and our capital investment program in May we increased our quarterly dividend by 5%, marking the 13th consecutive year of annual dividend growth.

Speaker Change: This year, we invested $1 5 billion and capital expenditures.

Michael C. McMurray: We reached an important milestone with the successful startup of our new POTBA asset in 2023. With the completion of this world-scale project, our future capital expenditures will be increasingly focused on a portfolio of smaller projects to advance our strategy. This includes investments in small profit-generating projects, integrated hubs for circular solutions, and hundreds of initiatives within the value enhancement program. We ended the year with $3.4 billion of cash and short-term investments, then $7.6 billion of cash and available liquidity.

Speaker Change: We reached an important milestone with the successful startup of our new P. O TBA asset in 2020 three with the completion of this world scale project, our future capital expenditures will be increasingly focused on our portfolio of smaller projects to advance our strategy. This includes investments in small profit generating projects.

Speaker Change: Hubs for circular solutions and hundreds of initiatives within the value enhancement program.

Speaker Change: We ended the year with $3 4 billion of cash and short term investments and $7 $6 million of cash and available liquidity in line with our strategic focus on leadership in sustainability, we issued our inaugural Green bond for $500 million.

Michael C. McMurray: In line with our strategic focus on leadership and sustainability, we issued our inaugural green bond for $500 million. LYB's robust balance sheet positions us well to move forward on a long-term strategy during the year ahead. One last comment.

Speaker Change: <unk> robust balance sheet positions us well to move forward on our long term strategy during the year ahead.

Speaker Change: One last comment.

Michael C. McMurray: We added over $1 billion of cash to our balance sheet in 2023 as a result of strong execution amid challenging market conditions. As a result, we are carrying about two times our stated minimum of $1.5 billion. We have built a bit more cash because of the challenging market conditions and uncertain economic outlook that we have been navigating. That said, our capital allocation priorities remain unchanged, and we remain committed to returning 70% of our free cash flow to shareholders over the long term. Now, I would like to provide an overview of the portal results for each of our segments on page 12. LYB's business portfolio delivered $910 million of EBITDA during the fourth quarter. Our lower results reflect a significant decline in gasoline crack spreads in seasonally lower demand during the fourth quarter. Lower gasoline crack spreads negatively impacted our refining results. Oxy fuels in the intermediates and drift with the segment and the value of co-product fuels in olefins and polyolefins Americas.

Speaker Change: We added over $8 billion of cash to our balance sheet and 2023 as a result of strong execution amid challenging market conditions. As a result, we are carrying about two times, our stated minimum of $1 5 billion.

Speaker Change: We had built a bit more cash because of the challenging market conditions and uncertain and uncertain economic outlook that we have been navigating that said our capital allocation priorities remain unchanged and we remain committed to returning 70% of our free cash flow to shareholders over the long term.

Now I would like to provide an overview of the quarterly results for each of our segments on page 12.

Speaker Change: <unk> business portfolio delivered $910 million of EBITDA during the fourth quarter our.

Speaker Change: Our lower results reflect a significant significant decline in gasoline crack spreads and seasonally lower demand during the fourth quarter.

Speaker Change: Lower gasoline cracks that spreads negatively impacted our refining results.

Speaker Change: Z fuels and the intermediates and derivatives segment and the value of co product fuels and olefins and polyolefin Americas.

Michael C. McMurray: During the quarter, lower ethane and energy costs and increased polyethylene exports benefited our O&P Americas business. However, overall, olefins and polyolefin demand remains soft, particularly in Europe, where utilization rates remain low. Lower demand and higher raw material costs negatively impacted our advanced polymer solutions segment. Additionally, across the portfolio, a non-cash LIFO inventory valuation charge decreased pre-tax fourth quarter results by approximately $55 million. As a reminder, the LIFO impact reflects changes in inventory valuation over the full year, and it's not necessarily limited to fourth quarter valuation. Before we discuss our segment results in detail, let me discuss our capital expenditure plans for 2024. We expect that our CapEx will be approximately $2.1 billion this year, a $600 million increase compared to 2023. Our capital plan includes approximately $800 million for profit-generating growth projects and $1.3 billion of sustaining investment to keep our assets running safely and reliably.

Speaker Change: During the quarter, lower ethane and energy cost and increased polyethylene exports benefited our O N P Americas business overall.

Speaker Change: Overall, olefin and polyolefin demand remains soft, particularly in Europe, where utilization rates remained low lower demand and higher raw material costs negatively impacted our advanced polymer solutions segment.

Speaker Change: Across the portfolio, a noncash LIFO inventory valuation charge decreased pre tax fourth quarter results by approximately $55 million as a reminder.

Speaker Change: Binder, the LIFO impact reflects changes in inventory valuation over the full year and its not necessarily limited to fourthquarter evaluations.

Speaker Change: Before we discuss our segment results in detail, let me discuss our capital expenditure plans for 2024.

Speaker Change: We expect that our capex will be approximately $2 $1 billion. This year, a $600 million increased compared to 2023. Our capital plan includes approximately $800 million for profit generating growth projects and $1 $3 billion of sustaining investment to keep our assets running safely and reliably.

Michael C. McMurray: The increased profit-generating capital includes investments to grow our circular and low carbon solutions business, as well as investments to lower the carbon footprint of our existing asset base, particularly in Europe. Funding required to drive our value enhancement program is included in our CapEx plan. We expect our 2024 effective tax rate will be approximately 20% and our cash tax rate will be a few percentage points higher. In the appendix of this slide deck, we have provided additional 2024 modeling information, including impacts from major plant maintenance, costs associated with the exit from our refining business, and other useful financial metrics. With that, I'll turn the call over to Ken. Ken?

Speaker Change: The increased profit generating capital includes investments to grow our circular and low carbon solutions business as well as investments to lower the carbon footprint of our existing asset base, particularly in Europe.

Speaker Change: Funding required to drive our value enhancement program is included in our Capex plan.

Speaker Change: We expect our 2024 effective tax rate will be approximately 20% and our cash tax rate will be a few percentage points higher in.

Speaker Change: In the appendix of the slide deck, we have provided additional 2020 for modeling information, including impacts from major plant maintenance cost associated with the exit from our refining business than other useful financial metrics with that I'll turn the call over to Ken Ken.

Ken Lane: Thank you, Michael. Let's begin the segment discussions on slide 13 with the performance of our Oliphants and Polyolefins America segment. Fourth quarter EBITDA was $604 million. During the quarter, a significant decrease in co-product values negatively impacted Oliphant's margins.

Thank you Michael let's.

Ken Layne: Let's begin our segment discussions on slide 13, with the performance of our olefins and Polyolefin Americas segment.

Ken Layne: Fourth quarter EBITDA was $604 million during the quarter, a significant decrease in co product values negatively impacted olefins margins.

Ken Lane: Polyolefin prices were stable domestically, while a very strong export volume led to some lower pricing in our overall portfolio. Strong demand from export markets continues to drive increased polyethylene volumes, and we didn't see the typical seasonal slowdown. We operated our assets at approximately 85% of nameplate capacity to match market demand and continued to actively manage working capital. Fourth quarter EBITDA included a LIFO inventory valuation benefit of approximately $75 million.

Polyolefin prices were stable domestically, while a very strong export volume led to some lower pricing in our overall portfolio.

Ken Layne: Strong demand from export markets continues to drive increased polyethylene volumes and we didn't see the typical seasonal slowdown.

Ken Layne: We operated our assets at approximately 85% of nameplate capacity to match market demand and continued to actively manage working capital.

Ken Layne: Fourth quarter EBITDA included a LIFO inventory valuation benefit of approximately $75 million.

Ken Lane: During the first quarter, we expect polyethylene prices to remain firm, with modest improvements in domestic demand and ongoing strength in export markets. We anticipate ethane and energy costs will remain favorable for our assets in the region, providing some margin tailwind. Overall, we expect to operate our O&P Americas assets at an average of approximately 80 percent during the first quarter, slightly lower than fourth quarter 2023 due to planned maintenance. In December, we signed two new Renewable Power Purchase Agreements. With these agreements, we've achieved almost 90% of our goal to procure at least 50% of our global power from renewable sources by 2030. In total, we have 12 agreements in place representing more than 1.3 gigawatts of renewable power capacity.

Ken Layne: During the first quarter, we expect polyethylene prices to remain firm with modest improvements in domestic demand and ongoing strength in export markets.

Ken Layne: We anticipate ethane that energy costs will remain favorable for our assets in the region, providing some margin tailwind.

Ken Layne: Overall, we expect to operate our O N P Americas assets at an average of approximately 80% during the first quarter slightly lower than fourth quarter 2023 due to planned maintenance.

Ken Layne: In December we signed two new renewable power purchase agreements.

Ken Layne: With these agreements we have achieved almost 90% of our goal to procure at least 50% of our global power from renewable sources by 2030.

Ken Layne: In total we have 12 agreements in place representing more than one three gigawatts of renewable power capacity.

Ken Lane: As we mentioned last quarter, we announced our investment in Cyclix, a joint venture with Agilex and ExxonMobil. This partnership is focused on increasing plastic waste recycling infrastructure to improve circularity. In December, Cyclix announced the final investment decision to build the first Cyclix Circularity Center in Houston.

Ken Layne: As we mentioned last quarter, we announced our investment in cyclical <unk>, a joint venture with <unk> and Exxonmobil.

Ken Layne: This partnership is focused on increasing plastic waste recycling infrastructure to improve circularity.

Ken Layne: In December cyclic announced the final investment decision to build the first cyclic Circularity center in Houston.

Ken Lane: The Circularity Center will focus on increasing plastic waste recycling options through better sourcing and sorting of plastic waste. The facility will have the capacity to produce more than 130,000 tons of plastic feedstock per year for advanced and mechanical recycling and is expected to start operation in 2025. Now please turn to slide 14 to review the performance of our olefins and polyolefins Europe, Asia, and international segments. During the quarter, European markets remained weak with softer seasonal demand and lower consumer confidence. Polymer prices were modestly higher with an improved sales mix and stable NAPDA feedstock costs.

Ken Layne: The Circularity center will focus on increasing plastic waste recycling options through better sourcing and sorting of plastic waste.

Ken Layne: The facility will have the capacity to produce more than 130000 tonnes of plastic feedstock per year for advanced and mechanical recycling and is expected to start up in 2025.

Ken Layne: Now please turn to slide 14 to review the performance of our Olefins <unk> Polyolefin as Europe Asia and International segment.

Ken Layne: During the quarter European markets remained weak with softer seasonal demand and lower consumer confidence.

Ken Layne: <unk> prices were modestly higher with an improved sales mix and stable naphtha feedstock costs.

Ken Lane: Due to the low demand, we operated our assets at rates of approximately 65% during the quarter. The combined impact of the weak demand and low rates led to a fourth quarter EBITDA loss of $87 million. As we move into 2024, we expect weak European demand will persist with ongoing consumer uncertainty. Nonetheless, we are seeing modest improvements in orders as some customers begin to restock and seek local supply as imports moving through the Red Sea are disrupted. We expect to operate our European assets at a rate of 75% during the first quarter. Demand in China remains muted as customers manage inventories with the approach of the Lunar New Year amid a slow economic environment.

Ken Layne: Due to the low demand we operated our assets at rates of approximately 65% during the quarter.

Ken Layne: The combined impact of the weak demand and low rates led to a fourth quarter EBITDA loss of $87 million.

Ken Layne: As we move into 2024, we expect weak European demand will persist with ongoing consumer uncertainty.

Ken Layne: Nonetheless, we are seeing modest improvements in orders as some customers begin to restock and seek local supply as the imports moving through the red sea or disrupted.

Ken Layne: We expect to operate our European assets at a rate of 75% during the first quarter.

Ken Layne: Demand in China remains muted as customers manage inventories with the approach of the lunar new year amid a slow economic environment.

Ken Lane: As Peter mentioned earlier, we are making great progress on our strategy to grow and upgrade our core businesses. Our recent announcement to acquire a 35% share of NatPET reflects our focus on assets that have a long-term advantage. But we're also moving away from assets that can't deliver long-term competitiveness, as demonstrated by last year's decision to close one of our two polypropylene assets in Brindisi, Italy. We are also making good progress with building our circular and low-carbon business. During the fourth quarter, we made the final investment decision to build our first commercial catalytic advanced recycling plant at our Vessling, Germany site. With an estimated capacity of 50,000 tons per year, this plant will utilize our differential MORTEC advanced recycling technology. And just like in Houston, we are collaborating with partners to secure plastic waste feedstock in Germany. In December, we acquired a minority share of Source One Plastics, a plastic waste sourcing company in Germany.

Ken Layne: As Peter mentioned earlier, we are making great progress on our strategy to grow and upgrade our core businesses our.

Ken Layne: Our recent announcement to acquire a 35% share of NAD pet reflects our focus on assets that have long term advantage.

Ken Layne: But we're also moving away from the assets that can't deliver long term competitiveness as demonstrated by last year's decision to close one of our two polypropylene assets and brand easy it'll.

Ken Layne: We're also making good progress with building, our circular and low carbon business.

During the fourth quarter, we made the final investment decision to build our first commercial catalytic advanced recycling plants at our vessel Ing, Germany site.

Ken Layne: With an estimated capacity of 50000 tons per year. This plant will utilize our differential more tech advanced recycling technology.

And just like in Houston, we are collaborating with partners to secure plastic waste feedstock in Germany.

Ken Layne: In December we acquired a minority share of source, one plastics, a plastic waste sourcing company in Germany.

Ken Lane: Source One will provide the majority of the processed plastic waste feedstock to our new MoorTech assets. Through our integrated hub model, we are establishing an integrated circular value chain at scale. Now please turn to slide 15 and let's take a closer look at our new NAPAD joint venture. A few weeks ago, we announced our agreement to acquire a 35% share of the National Petrochemical Industrial Company, or NatPET, from Alujain Corporation in Yanbu, Saudi Arabia. The joint venture is a great example of how we are growing our core businesses with advantaged assets by leveraging LYB's leading technology and global market reach. Today, NatPET consists of 400,000 tons of propane dehydrogenation, or PDH, capacity that converts cost-advantaged staudy propane into propylene monomer to feed a 400,000 ton polypropylene unit, utilizing LYB's proprietary SP

Ken Layne: <unk>, one will provide the majority of the process plastic waste feedstock to our new more tech asset.

Ken Layne: Through our integrated hub model, we are establishing an integrated circular value chain at scale.

Ken Layne: Now please turn to slide 15, and let's take a closer look at our new <unk> joint venture.

Ken Layne: A few weeks ago, we announced our agreement to acquire a 35% share of national petrochemical industrial company or Nat pet from Allergan cooperation in Yanbu, Saudi Arabia.

Ken Layne: <unk> venture is a great example of how we are growing our core businesses with advantaged assets by leveraging <unk>, leading technology and global market reach.

Ken Layne: Hey, Nat pet consists of 400000 tonnes of propane dehydrogenation or PTH capacity that converts cost advantaged, Saudi propane into propylene monomer to feed a 400000 tonne polypropylene unit utilizing <unk> proprietary spare pole technology.

Ken Lane: The assets have been operational since 2009 and have generated an annual average of $155 million in EBITDA over the five years from 2018 to 2022. NatPET's PP products serve a diverse range of customers across global markets. As part of the transaction, LYB will leverage its global marketing network to sell a majority of the product on behalf of NatPET, creating a new revenue stream for LYB. NatPET's assets are in the first quartile that have the advantage of sourcing local Saudi propane feedstock at a discount to global prices.

Ken Layne: The assets have been operational since 2009 and have generated an annual average of $155 million in EBITDA over the five years from 2018 to 2022.

Ken Layne: <unk> P. P products serve a diverse range of customers across global markets as part of the transaction <unk> will leverage our global marketing network to sell a majority of the product on behalf of that debt, creating a new revenue stream for L. B.

Ken Layne: <unk> assets are first quartile that had the advantage of sourcing local Saudi propane feedstock at a discount to global prices.

Ken Lane: Also, our investment in NABDAT provides a platform for continued growth. In 2022, that company was awarded a new feedstock allocation that could support additional capacity. The partners are evaluating a second PDH MPP asset on the site that would benefit from meaningful synergies. Previously, Allujane selected LYB's Spherozone polypropylene technology for the potential expansion. The high-performance polypropylene solutions enabled by our proprietary SphereZone technology provide the potential to expand NatPET's production into new applications and markets.

Also our investment in that that provides a platform for continued growth.

Ken Layne: In 2022 that pet was awarded a new feedstock allocation that could support additional capacity.

<unk> are evaluating a second PD H M. P. P asset on the site that would benefit from meaningful synergies.

Ken Layne: Previously Alley, Jane selected L. I B sphere zone polypropylene technology for the potential expansion.

Ken Layne: The high performance polypropylene solutions enabled by our proprietary sphere zone technology provides the potential to expand that pets production into new applications and markets.

Ken Lane: We expect our investment in NatPET will exceed our 12% target for unlevered internal rates of return. Additional capacity could provide even higher returns. We expect the transaction will close in the first half of 2024 following regulatory approvals and other customary closing conditions. With that, I will turn the call over to Kim.

Ken Layne: We expect our investment in that pet will exceed our 12% target for Unlevered internal rates of return.

Ken Layne: Additional capacity could provide even higher returns.

Ken Layne: We expect the transaction will close in the first half of 2024, following regulatory approvals and other customary closing conditions.

Ken Layne: With that I will turn the call over to Kim.

Kim Foley: Thank you, Ken. Please turn to slide 16 as we take a look at our intermediates and derivatives segments. Fourth quarter EBITDA was $265 million. Oxyfuel margins declined due to a significant decrease in gasoline CAC spreads as well as an increased supply of oxyfuels after industry downtime during the third quarter.

Kim: Thank you Ken Please turn to slide 16, as we take a look at our intermediates and derivatives segment.

Kim: Fourth quarter, EBITDA was $265 million ox.

Kim: Oxy fuel margins declined due to a significant decrease in gasoline crack spreads as well as an increased supply of oxy fuels after industry downtime during the third quarter.

Kim Foley: Styrene margins were pressured due to higher benzene feedstock costs. LIFO inventory charges were approximately $95 million. In the fourth quarter, we recognized an impairment of $192 million related to our POSM joint venture in the Netherlands. We operated our assets at a rate of approximately 70% during the fourth quarter due to low demand as well as planned and unplanned downtime across most businesses. As we begin the first quarter, oxy-fuel margins remain similar to fourth-quarter levels. We anticipate higher volumes across the segment after downtime in the fourth quarter and plan to operate across the I&D segment at approximately 75% in the first quarter. These operating rates reflect the impact of the recent winter freeze event resulting in unplanned downtime at our U.S. Gulf Coast assets. In December, we announced an agreement to divest our ethylene oxide and derivative business to INEOS for $700 million.

Styrene margins were pressured due to higher benzene feedstock costs.

Kim: LIFO inventory charges were approximately $95 million.

Kim: In the fourth quarter, we recognized an impairment of $192 million related to our P. O S N joint venture in the Netherlands.

Kim: We operated our assets at a rate of approximately 70% during the fourth quarter due to low demand as well as planned and unplanned downtime across most businesses.

Kim: As we begin the first quarter oxy fuel margins remained similar to fourth quarter levels.

Kim: We anticipate higher volumes across the segment after downtime in the fourth quarter and plan to operate across the IMT segment at approximately 75% in the first quarter.

Kim: These operating rates reflect the impact of the recent winter freeze event, resulting in unplanned downtime at our U S Gulf Coast assets.

Kim: In December we announced an agreement to divest our ethylene oxide and derivatives business to any of this for $700 million.

Kim Foley: As Peter mentioned earlier, we are taking decisive actions to grow and upgrade the businesses and assets that align with our long-term strategy while exiting businesses where LYB does not have a path to a leading position. We expect the transaction will close in the second quarter following regulatory approvals and other closing conditions. Please note that the agreed transaction price is pre-tax and that these assets are heavily depreciated. Now, let's turn to slide 17 and discuss the results of the refining segment. Fourth quarter EBITDA was $51 million, including charges of $40 million for the LIFO inventory valuation. Refining margins compressed due to a lower gasoline crack spread. During the quarter, we operated the refinery at 85% of capacity due to planned and unplanned downtime with an average crude rate of 230,000 barrels per day.

Kim: As Peter mentioned earlier, we are taking decisive actions to grow and upgrade their businesses and assets that align with our long term strategy, while exiting businesses or L. I V does not have a path to a leading position.

Kim: We expect the transaction will close in the second quarter following regulatory approvals and other closing conditions. Please.

Kim: Please note that the agreed transaction prices pretax and that these assets are heavily depreciated.

Kim: Now, let's turn to slide 17, and discuss the results of the refining segment.

Kim: Fourth quarter, EBITDA was $51 million, including charges of $40 million of LIFO inventory valuation.

Kim: Finding margins compressed at a lower gasoline crack spreads.

Kim: During the quarter, we operated the refinery at 85% of capacity due to planned and unplanned downtime with an average crude rate of 230000 barrels per day.

Kim Foley: In the near term, we expect gasoline crack spreads to improve, offset by lower distillate cracks. We plan to operate the refinery at approximately 80% of capacity in the first quarter, including a planned coker outage with an estimated EBITDA impact of $50 million. Our team remains highly focused on safe and reliable operations as we continue to run our refining assets through no later than the end of the first quarter of 2025. With that, I will turn the call over to Torque.

Kim: In the near term, we expect gasoline crack spreads will improve offset by lower distillate cracks we plan to operate the refinery Unfortunately, 80% of capacity in the first quarter, including a planned coker outage with an estimated EBITDA impact of $50 million.

Kim: Our team remains highly focused on safe and reliable operations as we continue to run our refining assets through no later than we ended the first quarter of 2025.

Kim: With that I will turn the call over to tackle.

Tackle: Thank you Kim now, let's review the results of our <unk> polymer solutions segment on slide 18.

Torkel Rehman: Thank you, Kim. Now, let's review the results of our Advanced Polymer Solutions segment on slide 18. Fourth quarter EBITDA declined to $12 million.

Tackle: Fourth quarter EBITDA declined to $12 million margins were pressured by higher raw material cost and volumes decreased due to seasonally lower fourth quarter demand with a slowdown in December due to customer outages.

Torkel Rehman: Margins were pressured by higher raw material costs and volumes decreased due to seasonally lower fourth quarter demand with a slowdown in December due to customer outages. Lifeway Inventory Valuations benefits were $10 million. Looking ahead, we see signs of market recovery and expect modest demand improvement in the first quarter. This year, we continued our transformation journey with Advanced Polymer Solutions. APS results in 2023 were lower than 2022 and not reflected in our financial expectations for this business. Success with APS customers is largely based on project-by-project qualification.

Tackle: LIFO inventory valuation benefits were $10 million.

Tackle: Looking ahead, we see signs of market recovery and expect modest amount of improvement in the first quarter.

Tackle: This year, we continued our transformation journey with advanced polymer solutions.

Tackle: Aps results in 2023 were lower than 2022, and not reflective of our financial expectations for this business.

Tackle: Success with Aps customers. This largely based on project by project quantification.

Tackle: Today's under performance is indicative of our low success rate and gaining new qualifications during prior quarters.

Tackle: However, our laser focus on our customers is gaining momentum.

Torkel Rehman: Today's underperformance is indicative of our low success rate in gaining new qualifications during prior quarters. However, our laser focus on our customers is gaining momentum. We have seen a step up in our recent surveys of customer satisfaction. With an organization that is focused and accountable, we're making steady progress as we rebuild our project growth funnel. Our growth pipeline is already delivering. During the fourth quarter of 2023, volumes improved by two and a half percent over the prior year. I want to congratulate the APS team for achieving record safety performance in 2023. I truly believe our customer focus, as measured by our recent customer satisfaction survey, our progress in filling our growth funnel, and our superior safety results reflect our attention to detail, which provides a leading indicator for operational performance and eventual financial results. With that, I will return the call to Peter. Thanks, Dorgo.

Tackle: We have seen a step up in our recent service or customer satisfaction.

Tackle: With an organization that is focused and accountable, we're making steady progress as we rebuild our project growth funnel.

Tackle: Our growth pipeline is already delivering.

Tackle: During the fourth quarter of 2023 volumes improved by two 5% over the prior year.

I want to congratulate the team for achieving record safety performance in 2023.

I truly believe our customer focus as measured by a recent customer satisfaction survey, our progress and refilling our growth funnel and our superior safety results reflects our attention to detail that provides a leading indicator for operational performance and eventual financial results.

Tackle: With that I will return the call back to Peter.

Thanks, Darko I would like to thank the entire lyondellbasell team for delivering such resilient results during a very challenging year.

To close out on the segments, let's turn to slide 19, and discuss the results for our technology business on behalf of Jim Stewart.

Peter Vaneker: I would like to thank the entire LyondellBasell team for delivering such resilient results during a very challenging year. To close out on the segments, let's turn to slide 19 and discuss the results for our technology business on behalf of Jim Stewart. During the fourth quarter, licensing revenue moderated after exceptionally strong results in the third quarter due to the timing of licensing milestones. Nonetheless, EBITDA for this segment exceeded the fourth quarter of the prior year. Fourth quarter catalyst volumes were higher than any quarter since the third quarter of 2022.

Tackle: During the fourth quarter licensing revenue moderated after an exceptionally strong results in the third quarter due to the timing of licensing milestones.

Jim Stewart: Nonetheless, EBITDA for the segment exceeded the fourth quarter of the prior year.

Jim Stewart: Fourth quarter catalyst volumes were higher than any quarter since the third quarter of 2022.

Jim Stewart: First quarter results for the technology segments are expected to improve due to increased licensing revenue and a further rise in catalyst volumes compared to the fourth quarter of 2023.

Peter Vaneker: First quarter results for the technology segments are expected to improve due to increased licensing revenue and a further rise in catalyst volumes compared to the fourth quarter of 2023. As Ken mentioned earlier, we will utilize our proprietary MORITEC technology as we build our first commercial-scale advanced recycling plant in Germany. I'm very proud of the work our R&D team embarked on years ago to develop this differential and advantage technology from lab to commercial scale. Let me now summarize our outlook on slide 20. As we begin 2024, the majority of our businesses are continuing to face the slow demand seen in the fourth quarter of 2023, but we are seeing some early signs of improvement. Our North American O&P business is seeing modest demand improvements. In Europe, order trends are improving from a very low level as our O&P customers begin to pursue modest restocking. For the year, we expect normal seasonal demand improvements to begin near the end of the first quarter and continue through the summer.

Jim Stewart: As Kevin mentioned earlier, we will utilize over appropriate Terry Moore. It takes technology as we build our first commercial scale advance recycling plant in Germany.

Jim Stewart: I am very proud of the work our R&D team embarked on years ago to develop this differential and advantage technology from lab to commercial scale.

Jim Stewart: Let me now summarize our outlook on slide 20.

Jim Stewart: As we begin 2020 for the majority of our businesses are continuing to face to slow demand seen in the fourth quarter of 2023.

Jim Stewart: But we are seeing a few early signs of improvements our north American <unk> business is seeing modest demand improvements.

Jim Stewart: In Europe order trends are improving from a very low level.

Jim Stewart: Oh MP customers begin to pursue modest restocking.

Jim Stewart: For the year, we expect normal seasonal demands improvements to begin near the end of the first quarter and continued through the summer as.

Peter Vaneker: As we progress through the second half of the year, we expect demand for durable goods to benefit from moderating interest rates and reduced inflation. Demand for durable goods lacked the economy during 2022 and 2023 as markets digested the extraordinary high levels of consumer activity that prevailed during the pandemic-era stimulus. We expect that moderating interest rates, reduced inflation, and infrastructure-related stimulus spending will begin to support a gradual return to healthier demand for durable goods during the second half of this year. China is the largest market for chemicals, exceeding North America and Europe combined.

Jim Stewart: As we progress through the second half of the year, we expect demand to benefit from moderating interest rates and reduced inflation.

Jim Stewart: Durable goods start a critical market for <unk> products.

Jim Stewart: Demand for durable goods lacks the economy during 2022 and 2023 as markets digested the extraordinary high levels of consumer activity that prevailed during pandemic era stimulus.

Jim Stewart: We expect that moderating interest rates reduced inflation and infrastructure related stimulus spending will begin to support a gradual return to healthier demand for durable goods during the second half of this year.

Jim Stewart: China is our largest market for chemicals exceeding North America and Europe combined.

Peter Vaneker: And we continue to watch closely for targeted stimulus and other measures that could drive improved economic growth in China. In the meantime, LYB will continue to advance on our strategic goals. We're actively managing our portfolio to grow and upgrade our core business. You will continue to see actions supporting the growth of regional hubs that will serve as the engines for our profitable circular and low carbon solutions business. And our work to embed value creation into our corporate culture will continue to deliver results through our value enhancement program. We're now pleased to take your questions. Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. As a reminder, if you have a question, please press the star followed by the 1 on your remote control. If you would like to withdraw your... Press the star followed by the X.

Jim Stewart: And we continue to watch closely for targeted stimulus and other measures that could drive improved economic growth in China.

Jim Stewart: In the meantime, <unk> B will continue to advance on our strategic goals.

Jim Stewart: We are actively managing our portfolio to grow and have a great quarter businesses.

Jim Stewart: You will continue to see action supporting the growth of regional hubs that will serve as the engines for our profitable circular and low carbon solutions business.

Jim Stewart: And our work to embed value creation into our corporate culture will continue to deliver results through over value enhancement program.

Speaker Change: We're now pleased to take your questions.

Thank you ladies and gentlemen at this time, we'll begin the question and answer session.

Speaker Change: If you have a question. Please press the star followed by the one on your Touchtone phone. If you would like to withdraw your question. Please press the star followed by the two we do ask that you limit to one question.

Operator: We do ask that you limit to one. Our first question comes from Stephen with Evercore ISI. Please proceed. Hi, thank you.

Speaker Change: Our first question comes from the line of Stephen Richardson with Evercore ISI. Please proceed with your question.

Stephen Richardson: Hi, Thank you Peter I Wonder if you could just digging.

Peter Vaneker: Peter, I was wondering if you could just dig in a little bit on the expectations for the second half and maybe just a little bit more on the O&P businesses. What kind of recovery are you kind of underwriting in your outlook? And, and how do you think that plays out, and any guideposts beyond the statements on durables we should be thinking about as you're progressing? Thank you, Stephen.

Digging a little bit on the expectations for the second half and maybe just a little bit more on the owned businesses what kind of recovery are you kind of underwriting and your outlook and how do you think that plays out in any guideposts beyond the statements on durables, we should be thinking about as the year.

Stephen Richardson: Yes.

Peter Vaneker: As usual, very good questions from your side. To start with, as we alluded to, I mean, we're still, I mean, a bit prudent on the guidance for Q1. But when we are looking at the second half of this year, there are a couple of things that I want to point out. This has been the longest downturn that we have seen as far as I can look back in our history.

Speaker Change: Thank you Steven as usual very good question from your side.

Speaker Change: To start with.

Speaker Change: As we alluded to I mean, we're still I mean, a bit prudence on the guidance for Q1.

Steven: But when we are looking at the second half of this year.

Steven: Things that I want to point to.

Steven: This has been the longest downturn that we have seen as far as I can look back in our history.

Peter Vaneker: So one would expect, I mean, that there will be, if you look at inflation rates going down, interest rates going down, more consumer confidence in Europe, maybe also in China, that demand would go up. So from a demand side. One would expect that demand would go up and that covers not only UMP business, but also if you look at durable goods, especially, as we all know, I mean, demand has been very low last year in durable goods, which of course has a lot to do with very high interest rates, and therefore consumer behavior so also here you would expect I mean that durable goods demand would go up I mean especially in the second half of this year, United States, as you know, has been quite robust and we have been able to navigate you see robust margins also on the polyethylene side, and also here as you know I mean inflation rates are going down you see already a little bit of indications there is more house builds houses that are being sold and that of course has a direct impact on demand for durable goods, Our next question comes from the line of Steve Byrne with Bank of America. Bernier Line is live. Sorry about that.

Steven: So one would expect I mean definitely will be if you look at inflation rates going down for interest rates going down.

Steven: More consumer confidence.

Steven: In Europe, maybe also in China that demand would go up so from a demand side.

Steven: One would expect that demand would go up and that covers not only deal with E business, but also if you look at durable goods, especially has.

Steven: As we all know I mean demand has been very low.

Last year in durable goods.

Steven: Which of course has a lot to do with very high interest rates.

Steven: Therefore consumer behavior. So also here you would expect I mean that durable goods demand would go up.

Steven: Especially in the second half of this year.

Steven: United States as you know has been quite robust and we have been able to navigate youll see robust margins also on the Korea to the inside.

And also here as you know I mean inflation rates are going down you see already a little bit of indications or Bismarck house builds houses urgent that are being sold and that of course has a direct team.

Steven: In fact 10.

Steven: On demand for durable goods.

Steven: Thank you. Our next question comes from the line of Steve Byrne with Bank of America. Please proceed with your question.

Steve Byrne: Mr. Byrne your line is live.

Steve Byrne: Sorry about that.

Peter Vaneker: It seems like we're seeing roughly, yeah, pardon me, I was on mute, sorry about that. Just regarding this, this NAPTAT joint venture, it seems like it's roughly 10 times EBITDA. Is that roughly right? And do you see potential for this investment to generate, you know, higher EBITDA down the road? And I just wonder the basis for that investment, given it seems like polypropylene is a bit oversupplied. And I guess my other question about it would be, what are the contract terms for the propane that you get from Saudi? And do you see any risk that that price could get escalated down the road? Thank you, Steve.

Steve Byrne: It seems like what you're saying roughly yeah pardon me I was on mute sorry about that.

Speaker Change: Just regarding this the snap.

Steve Byrne: Joint venture it seems like it's roughly 10 times EBITDA is that roughly right.

Speaker Change: And do you see potential for this investment to generate a higher EBITDA down the road.

Speaker Change: Just wanted wondering the basis for that investment given it seems like polypropylene bit oversupplied and I guess my other question on it would be what's what is the what are the contract terms for the propane that you get from Saudi any risk that that price could get us.

Speaker Change: Later down the road.

Speaker Change: Thank you Steve So good question on that pets.

Peter Vaneker: Also, a good question on NetPAT. First of all, I mean, we're very pleased that we were able to sign this deal that has been the work of a core team in our company, where I was personally, of course, deeply involved during quite a, an important period of time to come to this conclusion. When you look at the amount of money that we paid, and Ken alluded to that in his remarks, then one can not just look at the EBITDA, mid-cycle EBITDA, the $150 million for the entire company. But what you don't see and what one needs to take into consideration is the fact that we are the path to the market. So we are generating value for the company that comes out of selling the products outside of Saudi Arabia to our other markets and is therefore also strategically very important because we have a very sustainable low-cost feedstock basis that we have negotiated that is included in the deal so that we are better positioned in polypropylene to go to certain markets where maybe today we don't have the best position, and here let's not forget that we did close one line at our Br

Speaker Change: First of all I mean, we're very pleased that we were able to sign a deal that hasn't been.

Speaker Change: I cover a core team in our company, where I was personally of course deeply involved.

Speaker Change: Alright.

Speaker Change: An important period of time to come to this conclusion when you look at the amount of money that we paid and Ken alluded to that in his remarks.

Speaker Change: Then one cannot just look at EBITDA mid cycle, EBITDA under $50 million and for the entire company.

Speaker Change: But what you don't see what needs to take into consideration is the fact that we are the path to market. So we are generating value for the company.

Speaker Change: That comes out of selling the products outside of Saudi Arabia to our other markets and therefore also strategically very important because we have a very sustainable low cost feedstock basis.

That we have negotiated studies included.

Speaker Change: And the deal.

Speaker Change: So that we are better position in polypropylene to go to certain markets were.

Speaker Change: Maybe today, we don't have the best position in here, let's not forget that we did close.

Speaker Change: One nine.

Speaker Change: However in D C assets in Italy as well.

Peter Vaneker: In addition to that, as we alluded to, we have the income streams generated out of our license. We have the opportunity to continue to invest in the second line next to the existing line to capture synergies there, and that's why Ken alluded to the fact that, with the current deal, we have an IRR of about 12%. But then, if we do the second step, then we would be higher, I could say, I mean, quite higher than 12% of our final investment decision yet, but it is also part of the considerations in doing that first step. Hey Steve, and the multiple is probably closer to 9 versus 10, just for clarification.

Speaker Change: And to that as we alluded to we have the income streams generated license.

Speaker Change: Agreement, we have the opportunity.

To continue to invest with a second line next to the existing lines to capture synergies. There that's why Ken alluded to the fact that with the current deal we are in a dialogue, which is about 12%.

Speaker Change: But then when you do the second step.

Speaker Change: And then we would be higher.

Speaker Change: I can say I mean quite higher than 12% of our.

Speaker Change: Now the final investment decision yet, but it is also part of the considerations and doing that first step.

Speaker Change: Hey, Steve in the multiples probably closer to nine versus 10, just for clarity we.

Peter Vaneker: Without taking into consideration, I mean, marketing fees, etc., etc., our next question comes from the line of Patrick... Hi, good morning. Maybe within the 800 million in growth capex allocated for this year, how much of that is directly related to circular and low carbon solutions? And beyond that, you know, what should we expect in terms of, you know, inorganic growth and additional investments in that space for 2024? I will just refer, I mean, to Capital Markets Day.

Speaker Change: Without taking into consideration I mean marketing fees et cetera et cetera.

Speaker Change: Thank you.

Speaker Change: Question comes from the line of Patrick Cunningham with Citi. Please proceed with your question.

Patrick Fischer: Hi, good morning, maybe within the $800 million and growth Capex allocated for this year, how much of that is directly related to a circular in low carbon solutions.

Patrick Fischer: And that what should we expect expect in terms of.

Patrick Fischer: Organic growth and additional investments in that space for 2024.

Patrick Fischer: Hey will.

Speaker Change: Just referring to the capital markets day, we set about 15% net over the cycle.

Peter Vaneker: We said about 15% over the cycle. Michael, do you want to add something to that, I mean, for next year? Yeah.

Speaker Change: Ken Michael you want to add something to that I mean for next year, Yes, I mean, what what I'd say is that the guidance that we gave at capital markets day for for Capex remains intact.

Michael C. McMurray: I mean, what I'd say is that the guidance that we gave at Capital Markets Day for CAPEX remains intact. As a reminder, we said over the period 23 to 25, on average, we'd spend $2 billion. We got it to $2.1 billion today, and as Peter said, the expectation for the CLCS, our circularity business, is about 15 to 20% over the period. Now, specifically around inorganic growth, I'd probably say a couple of things.

Ken Michael: As a reminder, we sit over the period, 23% to 25 on average we'd spend $2 billion, we guided to $2 billion, one today and as Peter said the expectation for the sales CSR circularity business, it's about 15% to 20% over over the period.

Speaker Change: Now specifically around inorganic growth.

Speaker Change: I would probably say a couple of things.

Michael C. McMurray: I think at our capital markets day, we were clear that we hoped to get some M&A done over the next few years. I think we were pretty clear about the criteria that we shared in regards to growing and upgrading the core. I think the Thassall joint venture, our new POTBA facility, the circularity investments that we've made, and the refining exit are all great examples. And then our recent announcement of our EO and D exit is another great example. And quite frankly, it was a great valuation with a best owner mindset.

Speaker Change: At our capital markets day, we were clear that we hope to get some M&A done over the next few years I think we were pretty clear that criteria.

Speaker Change: That we shared in regards to growing and upgrading the core.

Speaker Change: The SaaS all joint venture our new P. O TBA facility, the circularity investments that we've made and the refining exit are all all great. Examples and then our recent announcement of our <unk> is another Great example, and quite frankly, it was a great valuation, we're the best owner mindset.

Michael C. McMurray: We also shared our approach to growth through M&As and joint ventures at our capital markets day, and I think with our DAPTPIT acquisition, we're off to a great start. And this clearly fits the framework which we shared back in March.

Speaker Change: We also shared our approach to growth through M&A and joint ventures at our capital markets day, and I think with our <unk> acquisition.

Speaker Change: We're off to a great start and is clearly fits the framework, which we shared a backend back in March and then it also has a great opportunity for future attractive growth and then finally at our at our March capital markets Day, we shared our goal of getting to $10 billion of EBITDA normalized EBITDA in 2027.

Michael C. McMurray: And then, finally, at our March capital markets day, we shared our goal of getting to $10 billion of EBITDA, normalized EBITDA, in 2027, which assumed we would deploy roughly the remaining 30% of our free cash flow that we hadn't returned to investors to fund our future M&A ambitions. But I want to be clear about a couple of things. Our commitments to investors remain steadfast, and our capital allocation principles and priorities remain unchanged. We will be disciplined acquirers. We will not burn your cash. We will not build a lazy balance sheet.

Speaker Change: Which assumed we would deploy roughly the remaining 30% of our free cash flow that we haven't returned to investors to fund our future M&A ambitions, but I want to be clear about a couple of things our commitments to investors remained steadfast in our capital allocation principles and priorities remain unchanged, we will be disciplined.

Speaker Change: While we will not burn cash we will not build a lazy balance sheet. If we can't find compelling transactions will give back more of your thoughts.

Michael C. McMurray: If we can't find compelling transactions, we'll give back more of your cash to you. Thank you. Our next question comes from the line of David Begleiter. Thank you. Good morning.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

David I. Begleiter: Thank you good morning, I pay you Justin I N D. How much of the P. O TBA plant contributed in 2023.

Peter Vaneker: Peter, just in IND, how much will the POTB plant contribute in 2023? Any mid-cycle earnings power here is still, with the new TBA plan, above $2 billion? And when do you think you'll start?

David I. Begleiter: Do you think mid cycle earnings power here is still with TBA plant above $2 billion and what do you think youll start.

Peter Vaneker: Achieving a run rating at that mid-cycle earnings level. Happy birthday, Dave. We heard that you had your birthday today.

David I. Begleiter: Achieving a running run rating at that mid cycle earnings level. Thank you.

David I. Begleiter: Happy birthday, Dave Happy birthday, Dave We heard that you have your birthday today.

Peter Vaneker: Thank you very much. Yeah, a good question. I mean, if I take one step back on the IND business in Q4, maybe a couple of numbers and stay with me. So, $265 million, excluding identified items, is the EBITDA that we generated in Q4. But one needs to take into consideration, of course, that we had a heavy LIFO impact of 95 million. So, if I add, I mean, the LIFO impact of 95 million, then actually, the underlying results were 360 million for Q4. Comparing to Q4 2022, which was 291 million, so a quite underwhelming performance; a good quarter in IND. And I did not even take into consideration the fact that we had scheduled turnarounds in Bottleg as well as in Bayport.

Speaker Change: Very much.

Speaker Change: Yeah. Good question I mean, if I take one step back on the <unk> business in Q4.

Speaker Change: Maybe a couple of numbers and stay with me so $265 million. Excluding identified items is the EBITDA that we generated in Q4, but one needs to take into consideration of course that we had a heavy LIFO impact of $95 million. So if I add I mean, the LIFO impact of $95 million that exited the underlying result.

Speaker Change: For $360 million for Q4.

Speaker Change: Comparing to Q4, 2022, which was $291 million.

Speaker Change: So a quite underlying performance good quarter, and I N T and I did not even take into consideration. The fact that we had scheduled turnarounds.

Speaker Change: Bulk leg as well as in.

Peter Vaneker: So we alluded to that in our guidance at the time when we released the Q3 results, an impact of about 120 million dollars. So, underlying quite a good quarter in IND, and of course, part of that was also due to the fact that we very successfully started up our POTVA plans. The new POTBA plans... We alluded to mid-cycle margins of $450 million. We said last year in year one, so that means 2023.

Speaker Change: <unk>, so we alluded to that I mean in our guidance at the time.

Speaker Change: When we released the Q3 results.

Speaker Change: An impact of about $120 million, so quite a good quarter in R&D.

Speaker Change: Of course part of that was also due to the fact that we very successfully started up or TBA plant.

Speaker Change: The new GPO TBA plants.

Speaker Change: He alluded to mid cycle margins $450 million, we set last year in year, one so that means 2023.

Peter Vaneker: We would run at a minimum of 50% nameplate capacity. We overachieved that target. We ran at approximately a little bit more than 60%, I would say.

Speaker Change: We would run at a minimum of 50% nameplate capacity, we over achieved our targets we ran at approximately.

Speaker Change: More than 60% I would say.

Peter Vaneker: And then also when we look at this year, we will continue to ramp up, but we will do it in a very disciplined way, reflecting market demand for propylene oxide and oxyfuels. But one may see further progress, I would say probably going to 70, maybe exceeding 70% capacity utilization. And then when we move into 2025, that's where one would see the full benefit of the PLTBA plan, but in terms of capacity utilization. Thank you. Our next... This has been a presentation from Vincent Andrews on behalf of Morgan Stanley. Hello, thank you very much.

And then also when we look at this year, we will continue to ramp up but we will do it in a very disciplined way, reflecting on market demand for propylene oxide and oxy fuels.

Speaker Change: But what may see further progress I would say probably a.

Speaker Change: Going to 70, maybe exceeding 70% capacity utilization and then when we move into 2025, that's where one would see the flu benefit.

Speaker Change: Okay TBA plant.

Speaker Change: In terms of capacity utilization.

Speaker Change: Thank you. Our next question comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Vincent Stephen Andrews: Thank you very much just on the value enhancement program I'm just trying to.

Michael C. McMurray: Just on the value enhancement program, I'm just trying to understand the impact on 23 and 24 a bit better. If we just sort of, kind of looked at a ratio of sort of what that 2017 to 2019 EBITDA was at Lyondell then versus what it would be in 2023. If we apply that ratio to the VEP numbers, would that be about right in terms of what you enjoyed from it in 23 and what you expect in 24? Yeah, what I'd say. I mean, hopefully, you heard my prepared remarks, Vincent.

Vincent Stephen Andrews: Understand the impact of <unk>, 23, and 24 a bit better.

Vincent Stephen Andrews: If we just sort of.

Speaker Change: Kind of.

Speaker Change: <unk>.

Speaker Change: Looked at a ratio of sort of what that 27% to 2019 EBITDA.

Speaker Change: EBITDA was at Lyondell, then versus what it was in 2023.

Speaker Change: If we apply that ratio to the EP numbers would that'd be about right in terms of what you enjoyed from it in 'twenty three and what you expect in 'twenty four.

Speaker Change: Yeah, what I'd say I mean, hopefully you heard my prepared remarks, Vince and so the benefit the actual benefit in our P&L for 2023 was approximately $300 million.

Michael C. McMurray: So the benefit, the actual benefit in our P&L for 2023 was approximately $300 million. And then we guided for 24, for an exit run rate of $600 million. Now, if you try to draw a line from 23 to 25, you know, it looks like the kind of pace of change slows a bit.

Speaker Change: And then we guided we guided for 'twenty four for an exit run rate of $600 million now.

Speaker Change: Now if you're trying to draw a line from 23 to 25, it looks like the kind of the pace of change slows a bit but keep in mind that last year, we focused on low hanging fruit things that didn't require investment and that we could actually execute upon very quickly. So we're in kind of building up.

Michael C. McMurray: But keep in mind that last year, we focused on low-hanging fruit, things that didn't require investment and that we could execute upon very quickly. So we're kind of building up projects again, as we said this year, but we have high, high confidence in the outlook that we gave up to $1 billion in 2025. And again, $300 million of P&L benefit in 23, factual. Our next question comes from the line of my, Wells Fargo, Hey, cheers. In terms of 2024, you know, a lot of chemical companies who've reported thus far have sort of said their earnings could recover or be better in 24 versus 23. Sounds like your first half is going to be a little bit challenged with demand being weaker and the second half being a little bit better. So when you sort of total it all up, potentially, what you see in 24, should earnings be up, flat, or down? Or just, you know, maybe actually, for the full year, how do you think about the setup for earnings? Well, Michael, I think you said it yourself. I mean, Q1 is still modest.

Speaker Change: Ah projects again as we sit in this year, but we have high confidence in the outlook that we gave to up to $1 billion in 2025.

Speaker Change: And again $300 million of P&L benefit in 'twenty three.

Speaker Change: Actual.

Speaker Change: Thank you. Our next question comes from the line of Michael Sison with Wells Fargo. Please proceed with your question.

Michael Sison: He chairs.

Michael Sison: In terms of 2024, yeah, a lot of chemical companies have reported thus far has shown us.

Michael Sison: The earnings could be cover or be better in 'twenty four versus 'twenty three.

It sounds like your first half is going to be a little bit challenged with demand being weaker in the second half being a little bit better so when.

Can you sort of told a lot potentially what you see in 'twenty four I should say the earnings be up flat or down or just maybe directionally for the full year, how do you think about.

Michael Sison: The setup for earnings.

Speaker Change: Well, Michael I think you said it yourself I mean Q Q1.

Speaker Change: And it's still modest.

Peter Vaneker: Q2, seasonal demands, I mean picking up, and then what I said at the beginning also the second half of the year, we expect, at least I mean that we will see interest rates going down, demand for durable goods, I mean going up, some recovery in Europe, some recovery in China, so as a consequence, if you add it all up, one would expect that earnings are going to be better than last year, but mostly in the second half. To be clear, Our next question comes from the line of Arun Viswanathan with RBC Capital. You're on mute, Arun.

Speaker Change: Q2.

Seasonal demand picking up and then what I said at the beginning of the second half of the year.

Speaker Change: We see we expect at least to mean that we will see.

Speaker Change: Trust rates going down demand for durable goods have been going up.

Speaker Change: Some recovery in.

Speaker Change: In Europe, some recovery in China. So as a consequence, if you added all that one would expect that things aren't going to be better than last year.

Speaker Change: But mostly in the second half.

Speaker Change: To be clear.

Speaker Change: Thank you. Our next question comes from the line of Arun Viswanathan with RBC capital markets. Please proceed with your question.

Arun S. Viswanathan: You are on mute Arun.

Operator: We'll go on to our next question, which comes from the line of Kevin McCarthy with Vertical Research. Please proceed with, Good morning and thank you. In 2024, would you expect..., www. LyondellBasellIndustries.com 20% and often regional mix is the reason behind that, but perhaps there are other reasons you might call out, maybe you could just kind of talk through the dynamics there be helpful. Yeah, hey, I'm happy, happy to talk through it. So yeah, I mean, our ETR we got it to have 20% is up roughly one percentage point versus what it was in 2023. So, not a not a not a huge number of stories. There's, there's a few given takes.

Arun S. Viswanathan: I'm sorry, we'll go on to our next question comes from the line of Kevin Mccarthy with vertical Research partners. Please proceed with your question.

Kevin W. McCarthy: Yes, good morning, and thank you in 2024 would you expect your regional mix of earnings to differ materially from 2023 part of the reason I ask is it looks like you're guiding to a tax rate is 20% and often re.

Kevin W. McCarthy: Digital mix is the reason behind that but perhaps or other other reasons you might call out maybe you could just kind of talk through the dynamics there would be helpful.

Speaker Change: Yes, I'm happy happy to talk through it so yeah, I mean, our the ETR, we guided to a 20% is up roughly one percentage point versus.

Speaker Change: What was in 2023, so not not a not a huge stories theres a few given given takes now we did guide our cash tax rate to be up.

Michael C. McMurray: Now we did guide our cash tax rate to be up a couple of percentage points versus last year and also our ETR from 2023. And that's largely driven by a decrease in US tax depreciation and also the gain on the sale of our EOND business. Hopefully that's helpful. Our next question comes from the line of John Roberts with Mizzou.

Speaker Change: A couple of percentage points versus versus last year and also our ETR from 2023, and that's largely driven by.

Speaker Change: The decrease in U S tax depreciation and also the gain on the sale of our <unk> business hopefully that is helpful.

Speaker Change: Thank you. Our next question comes from the line of John Roberts with Mizuho. Please proceed with your question.

Ken Lane: Thank you. Could we get an update on your China operations both in PO styrene and your polyolefins JVs? Yes, John, and welcome back. Let me give that question, I mean, to Ken, the opportunity.

Thanks. Thank you could we get an update on your China operations, both in styrene and your polyolefin JV.

John Roberts: Yes, John I mean and welcome back.

Let me give that question I mean to Ken the opportunity Yeah sure I'll take I'll take the question for O N P. And then maybe Tim you can comment on and even throw in pain. We continue to operate the joint venture at technical minimums.

Ken Lane: Yeah, sure. I'll take the question for O&P. And then maybe, Kim, you can comment on IND.

Ken Lane: But for O&P, we continue to operate the joint venture at technical minimums. The focus really is on finding a better product mix and customer mix in the region. You know, our focus when we entered that joint venture was to build out an increased presence in the domestic market because we do market the high-density polyethylene and polypropylene from the asset. The team did a great job with that last year.

Speaker Change: The focus really is on finding.

Ken: Better product mix and customer mix and region. Our focus when we entered that joint venture was to build out an increased presence in the domestic market because we do market to high density polyethylene and polypropylene from the asset.

Speaker Change: The team did a great job with that last year. So earnings of course are still very challenged and in China. If you look at.

Ken Lane: So, earnings, of course, are still very challenged in China. If you look at average margins, they're still slightly negative, which we're seeing in our asset, even with a new world-scale asset, it's still a very challenging market. And we expect to start to see some improvement in that in the second half of the year. But so far, demand has been, I'd say, modestly improving, but we haven't really seen an improvement in margins yet. Kevin?

Speaker Change: Average margins are still slightly negative.

We're seeing that in our asset even even with a new world scale asset it still is a very challenging market.

Speaker Change: And we expect to start seeing some improvement in that in the second half of the year, but so far <unk>.

Speaker Change: <unk> has been I'd say modestly improving but haven't seen really an improvement in margins yet Kevin.

Kim Foley: I would say as it relates to the joint ventures we have on the propylene oxide side, we ran both of those JVs above 95% operating rates last year, excluding a turnaround, which was significantly higher than other P.O. plants in that region, and as Ken alluded to, the margins were rather thin. We saw high raw material costs, and we also saw high utilities. But, as we've mentioned before, these are the best technologies that we have in the region. They are very cost competitive and sit on integrated sites owned by a very good operator with expertise in both of these technologies.

Speaker Change: I would say as it relates to the joint ventures, we have on the propylene oxide God. We ran both of those JV is about 95% operating rates last year, excluding a turnaround.

Speaker Change: Significantly higher than other P O plants in that region.

Speaker Change: As Ken alluded to the margins were rather thin and we saw high raw material costs and we also sell high utilities.

Speaker Change: But as we've mentioned before these are the best technologies.

Speaker Change: And the region. They are very cost competitive they sit on integrated sites owned by very good operator with expertise in both of these technologies and we think as we go forward we have huge potential here.

Kim Foley: And we think as we go forward, we have huge potential here. And may I add, I mean, to that also, you probably noticed some news flow around China phasing out chlorine-based Propylene Oxide Technologies towards 2025. This is still the majority of propylene oxide capacity in China that would be phased out over time, which also fits us very well together with our global strategy, the successful startup of our POTVA plant, and how we are running this business successfully under Kim's leadership on a global basis.

Speaker Change: EMEA atom into that also you'll probably notice.

Speaker Change: Some news flow around China.

Speaker Change: Phasing out.

Speaker Change: Fluoro in fluorine based.

Speaker Change: Propylene oxide technologies.

Speaker Change: Towards 2025 does it still I mean, the majority of our propylene oxide capacity in China.

Speaker Change: That would be phased out over time.

Speaker Change: Which also fits for us fairly growth together with our global <unk>.

Speaker Change: Strategy the successful startup of our P O TBA plant and we are running this business successfully under Kevin's leadership.

Peter Vaneker: Thank you. Our next question comes from Mike Leathead with Barclays. Great. Thank you. Good morning, guys.

Speaker Change: From a global basis.

Speaker Change: Thank you. Our next question comes from the line of Mike <unk> with Barclays. Please proceed with your question.

Mike: Great. Thank you and good morning, guys.

Peter Vaneker: I wanted to ask you about O&P EAI. EBITDA has been below break-even, I think, for the last six quarters. And I appreciate demand isn't great across most markets, but it just seems like there's been a bit of a shift here versus the profitability of the past decade. So do we need to take a bigger restructuring overhaul to make this business profitable again? Do we need to wait for the world to get better?

Mike: I wanted to ask around own P/e AI EBITDA has been below breakeven I think for over the last six quarters and I appreciate demand isn't great across most markets.

Mike: It just seems like there's been a bit of a shift here versus the profitability of the past decade. So do we need to take a bigger restructuring overhaul to make this business profitable again.

A wait for the world to get better I mean, just how are you approaching that business here in 'twenty four.

Peter Vaneker: I mean, how are you approaching that business here in 2024? Yeah, thank you, Mike. A very good question.

Speaker Change: Yes. Thank you Mike very good question.

Peter Vaneker: And you've seen from our actions already last year that we are turning around, I mean, every stone. We did shut down one line in Brindisi, which is an important capacity. We've seen that there have been a couple of other announcements in the marketplace in terms of consolidations. We continue to look, of course, at the entire portfolio. That's what you would expect us to do.

Speaker Change: You have seen from our actions already last year.

Speaker Change: We are turning around to <unk> every stone.

Speaker Change: We did shut down then the one line.

Speaker Change: <unk>, which is an important capacity.

Speaker Change: Seeing that there has been a couple of other announcements in the marketplace in terms of.

Speaker Change: Consolidations, we continue to look of course at the entire portfolio. That's what you would expect us to do that.

Peter Vaneker: But having said that, if I also reflect back on Q4, the big picture for Q4 for the company for us was towards the end of the year. We wanted to also optimize our cash flow and working capital, and we freed up about 700 million dollars in working capital in Q4. And as a consequence, Ken steered his business towards lower than what we had originally guided him to. 75% of capacity utilization was the guidance. We reduced, at really, I mean, surprisingly low levels, 65% of our capacity utilization. Again, in the context of also, with the current market environment, optimizing our working capital. Ken, anything you want to add?

Speaker Change: But having said that if they all also reflect back on Q4.

Speaker Change: Picture on Q4.

Speaker Change: The company for US was towards the end of the year.

Speaker Change: Ed.

Speaker Change: We wanted to also optimize our cash flow and working capital and we freed up about $700 million and working capital in Q3 into Q4 and as a consequence of cortisol so Ken.

Speaker Change: Ken Crts business, two words nowhere Thats, what we had originally guided to 75% of capacity utilization was the guidance.

Speaker Change: We reduced.

Speaker Change: Really I mean surprisingly low levels, 65% of our capacity utilization again in the context of also with.

Speaker Change: With the current market environment, optimizing our working capital.

Speaker Change: Anything you want to add.

Ken Lane: No, that's it. I mean, that just impacted BNL with the absorption of the fixed costs that go along with that. But we pulled hard on the working capital lever, and we're going to continue to stay focused on maximizing cash flow in the challenging environment. Yeah, and we see the future also in Europe.

Speaker Change: I mean that just impacted the P&L with the absorption of fixed costs that go along with that but we pulled hard on the working capital lever and we're going to continue to stay focused on maximizing cash flow the challenging environment.

Speaker Change: Yes, we see the future also in Europe. I mean, you see also that regulation is progressing in terms of renewable and circular.

Peter Vaneker: I mean, you also see that regulation is progressing in terms of renewable and circular solutions, which is actually also what we are focusing on. I mean, with quite a lot of activities in terms of building up our Cologne hub, up to, I mean, the final investment decision for our MoriTech One facility, but lots of joint ventures and feedstock corporations that we have built up in the meantime. So I continue to believe that these circular and renewable solutions demand, I mean, local supply chains. So, it will be very important to have such a leading position in the local markets with access to brand owners or APS business access to OEMs as well.

Speaker Change: Solutions.

Speaker Change: Which is actually.

Speaker Change: So what we are focusing up on I mean with.

Speaker Change: Quite a lot of activities in terms of building up or Cologne hooked up to the final investment decision for Omar Maher I think one facility.

Speaker Change: But lots of joint ventures, and feedstock corporations that we have.

Speaker Change: Anytime.

Speaker Change: No.

Speaker Change:

Speaker Change: In Europe there.

I continue to believe that is surgically and renewable solutions.

Speaker Change: Data demands I mean local supply chains.

Speaker Change: So therefore.

Speaker Change: It will be very important to have such a leading position in our local markets with the access to brand owners or Aps business access to Oems as well.

Peter Vaneker: Thank you. Our next... Online with John McNulty with BMO Capital. Yeah, thanks for taking my question. Just a follow-up on the NatPET joint venture. I guess, can you help us to understand in terms of the ability to upscale that with the additional allocation? Is it similar in scale or size?

Speaker Change: Thank you. Our next question comes from the line of John Mcnulty with BMO capital markets. Please proceed with your question.

John Mcnulty: Yes. Thanks for taking my question just a follow up on the net pet joint venture I guess can you help us to understand in terms of the ability to upscale that with the additional allocation is it similar in scale or size is it would it be kind of the 400 K T E.

Ken Lane: Would it be kind of the 400 KTA? And also, when you think about the timing of the financial investment decision and also how the capital gets allocated, is it going to be proportional? You know, the same kind of 35%, 65%? Or is there some other different variation to that?

John Mcnulty: And also when you think about the timing of <unk>.

John Mcnulty: Financial investment decision and also how.

How the capital gets allocated is it going to be proportional.

John Mcnulty: It's the same kind of 35%, 65% or is there. Some some different variation to that can you help us to think about those.

Ken Lane: Can you help us to think about those? Yeah, the current capacity, as you rightfully said, is around 400 kT, so with the other technology that Ken referred to, we would be able to scale up to a total capacity of One million tons. Again, we have 35% of the joint venture. So that 35% is valid, I mean, for the current capacity, but it can also be valid, I mean, for future capacity, if we take a final investment decision. And is there any more information that you want to share?

Speaker Change: Yes, the current capacity as you rightfully said, there's around 400 K T.

Speaker Change: So with the other technology that Kevin referred to I mean, we would be able to scale up to a total capacity of.

Speaker Change: 1 million tonnes.

Speaker Change: And.

Again, we have 35%.

Speaker Change: Uh huh.

Speaker Change: The joint venture so that 35% is valid I mean for the current capacity, but we can also be thought that I mean for our future capacity. If you take a final investment decision.

Speaker Change: For more information or if you want to sure yes, I'll just add that part of the synergy that you had talked about before is that region is short of propylene and so we're going to have additional propylene capacity with this expansion, which is one of the synergies around around.

Peter Vaneker: Yeah, I'll just add that part of the synergy that you had talked about before is that the region is short of propylene. And so we're going to have additional propylene capacity with this expansion, which is one of the synergies around potentially executing that. But, you know, it will be financed by the joint venture. And yes, it'll be proportionate for the shareholders, but we don't expect to be putting cash in; that's going to be something financed by the joint venture. Thank you. Our final question this morning comes from the line of Matthew Blair with Tudor. Good morning.

Speaker Change: Executing that but.

Speaker Change: It will be financed by the joint venture and yes, it will be proportionate and for the shareholders, but we don't expect to be putting cash and that's going to be something financed by the joint venture.

Speaker Change: Thank you. Our final question. This morning comes from the line of Matthew Blair with Tudor Pickering Holt. Please proceed with your question.

Matthew Blair: Good morning, looking at the 70% payout target versus free cash flow.

Michael C. McMurray: Looking at the 70% payout target versus free cash flow, just in the context of increasing CapEx, when you're considering these payout targets, why is the denominator free cash and not more of like cash from operations? Don't you need to balance these returns on the growth investments against returning cash to investors? I'm not sure I fully understand your question, but it's pretty typical when you're giving payout targets to give them on the free cash flow line versus operating cash flow.

Just in the context of increasing Capex when youre considering your payout targets why is the denominator free cash and not more of like a cash from operations.

Aren't you need to balance.

Matthew Blair: These returns on the growth investment.

Matthew Blair: Returning cash to investors.

Speaker Change: Not sure I fully understand your question, but yes, its pretty its pretty typical when you're giving payout targets to give it on the free cash flow line versus operating cash flow.

Michael C. McMurray: And then we also at the capital markets, they guided us towards, I mean, that what is the CapEx level that we are investing in? Yes, a sustainable CapEx around 1.2, 1.3 billion a year. And then the growth CapEx, we also said we're going to be pretty much in the range of our historic spending, somewhere between two and three billion on a yearly basis, depending on how these projects come. So I think that helps you, I mean, to do the back of the envelope calculation, whatever cash flow number you take, you're going to be pretty much in the range of your historic spending.

Speaker Change: And then we also at the capital markets day guided two words, I mean that what is the capex level that we are investing.

Speaker Change: So sustainable capex around that one to $1 3 billion a year and on the growth Capex. We also said we're going to be pretty much in the range.

Speaker Change: Hope over historic spending somewhere between two and 3 billion on a yearly basis, depending on how these projects come. So I think that helps you want me to do the back of the envelope calculation whatever cash flow number you can take.

Speaker Change: Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. <unk> for final comments.

Operator: Ladies and gentlemen, that concludes our time allotted. I'll turn the floor back to Mr. Vannegraaff. Okay, thank you again for all the excellent questions, and, of course, I also want to thank our global team for delivering outstanding value and maximizing cash conversion during these challenging times. We look forward to sharing more updates over the coming months with further progress on our long-term strategy. We wish you all a great weekend and stay well; stay safe. Thank you. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you.

Speaker Change: Okay. Thank you again for all the excellent questions and of course I also want to thank our global team for delivering outstanding value and maximizing cash conversion during these challenging times.

Speaker Change: Look forward to sharing more updates over the coming months with further progress on our long term strategy. We wish you a great weekend and stay well stay safe. Thank you.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.