Q1 2024 LyondellBasell Industries N.V. Earnings Call

April 26, 2024

Hello, and welcome to the Lyondellbasell teleconference. At the request of lineup also 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 conference over to Mr. David Kenny.

Operator: 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 conference over to Mr. David Kinney, Head of Investor Relations.

David Kinney: Head of Investor Relations, Sir you may begin.

David Kinney: Good day, everybody, and thank you for joining today's call. 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 on-gap financial measures. We believe the forward-looking statements are based upon reasonable assumptions and the alternative measures are useful to investors. However, these forward-looking statements are subject to significant risk and uncertainty.

David Kinney: Good day, everybody and thank you for joining today's call before we begin the discussion I would like to point out that a slide presentation that accompanies today's call and is available on our website at www Dot Lyondellbasell Dot com Slash Investor relations today, we will be discussing our business results, while making reference to some forward looking statements non-GAAP.

Peter Z. E. Vanacker: Thank you, David, and welcome to all of you. We appreciate you joining us today as we discuss our first score for results. During today's call, our leaders will be discussing results in line with the organizational changes we announced on February 19th. In addition to her prior responsibilities for refining and supply chain, Kim Foley is now our executive vice president for global olefins and polyolefins.

David Kinney: The measures we believe the forward looking statements are based upon reasonable assumptions and the alternative measures are useful to investors on.

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 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 regarding our underlying business results using non-GAAP financial measures such as EBITDA and earnings per share excluding unidentified 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.

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.

Peter Z. E. Vanacker: Kim will discuss the results for both the O and P segments as well as the refining segment. Also, joining us for the first time on our Earnings Telephone Conference in his new role as Executive Vice President is Aaron Ledet. We're taking over responsibility from Kim in leading our intermediates and derivatives segments. Over more than 20 years in the petrochemical industry, with 12 of those years at LYB, Aaron has served in a variety of roles in both Europe and the United States.

David Kinney: 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.

David Kinney: 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.

David Kinney: A recording of this call will be available by telephone beginning at one P. M. Eastern time today until May 20, <unk> by calling 870 76606853 in the United States and 20161 to 70 415 outside the United States.

David Kinney: A recording of this call will be available by telephone beginning at 1 p.m. Eastern Time today until May 26th by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The access code for both numbers is 137-430-73. Joining today's call will be Peter Vanacker, LyondellBasell's Chief Executive Officer, our CFO, Michael McMurray, Kim Foley, our Executive Vice President of Global Olefins and Polyolefins and Refining, Aaron Ledet, our EVP of Intermediates and Derivatives, and Torkel Rhenman, our EVP of Advanced Polymer Solutions. During today's With that being said, I would now like to turn the call over to Peter.

Peter Z. E. Vanacker: Most recently, Aaron was responsible for the manufacturing and commercial operations for our ONP Americas segment, where he was also responsible for developing future options for our Houston refinery. Please join me in welcoming Aaron to this call.

David Kinney: The access code for both numbers is 103 743073.

David Kinney: Joining today's call will be Peter Banneker lined up sells chief Executive officer, our CFO, Michael Mcmurray, Kimco <unk>, our executive Vice President of global Olefins, <unk> Polyolefin and refining.

Peter Z. E. Vanacker: Before we dive into the results, I hope you will invest some time to review this year's edition of our sustainability report, which we released a few weeks ago. Over the past year, we have embedded sustainability into our strategy and made significant progress on our ambition. This year's sustainability report describes how LYB is making everyday sustainability a reality. Now, let's turn to slide three and begin the discussion with our continued leadership in safety performance.

David Kinney: Aaron let day, our EVP of intermediates and derivatives and tour called Renmin, our EVP of advanced polymer solutions.

Speaker Change: During today's call, we will focus on first quarter results current market dynamics, our near term outlook and our long term strategy.

Peter Z. E. Vanacker: But that being said I would now like to turn the call over to Peter.

Peter Z. E. Vanacker: Thank you, David, and welcome to all of you. We appreciate you joining us today as we discuss our first quarter results. During today's call, our leaders will be discussing results in line with the organizational changes we announced on February 19th. In addition to her prior responsibilities for refining and supply chain, Kim Foley is now our executive vice president for global olefins and polyolefins.

Peter Z. E. Vanacker: Thank you David and welcome to all of you.

Peter Z. E. Vanacker: There is no greater accomplishment than having every member of our team return home to their families every day in the same condition as when they began their working day. This is a cornerstone of our successful and sustainable business. LyondellBasell's first quarter incident rate for employees and contractors improved to a rate of only one injury per two million hours worked. We believe our safety metrics continue to hold a leading position in our industry. And I want to congratulate our team for their outstanding safety performance.

Peter Z. E. Vanacker: We appreciate you joining us today as we discuss our first quarter results.

Peter Z. E. Vanacker: During today's call our leaders will be discussing results in line with the organizational changes we announced on February 19th.

Peter Z. E. Vanacker: In addition to her prior responsibilities for refining and supply chain came fully is no our executive Vice President for global Olefins <unk> polyolefin.

Kimberly A. Foley: Kim will discuss the results for both the O and P segments as well as the refining segment. Also, joining us for the first time on our Earnings Telephone Conference in his new role as Executive Vice President is Aaron Lede. We're taking over responsibility from Kim in leading our intermediates and derivatives segment. Over more than 20 years in the petrochemical industry, with 12 of those years at LYB, Aaron has served in a variety of roles in both Europe and the United States.

Peter Z. E. Vanacker: Kevin will discuss the results for both <unk> and <unk> segments as well as the refining segments.

Peter Z. E. Vanacker: Joining us for the first time on our earnings telephone conference in his new role as executive Vice President Aaron Litigate.

Peter Z. E. Vanacker: Moving to slide four, as we discuss our company's performance during today's teleconference, we hope you will take away two main messages. First, LyondellBasell continues to generate resilient results while managing challenging market conditions that have pressured our industry over the past two years. In the first quarter, LYB increased its EBITDA modestly over the fourth quarter. However, our cash generation was negatively impacted by built-in working capital for good reasons, higher prices, and higher volumes.

Aaron Litigate: Who is taking over responsibility from kitten, and leading our intermediates and derivatives segment.

Aaron Litigate: Over more than 20 years in the petrochemical industry with 12 of those years at L. Y B. Aaron has served in a variety of roles in both Europe and the United States most.

Kimberly A. Foley: Most recently, Aaron was responsible for the manufacturing and commercial operations for our O&P Americas segment, where he was also responsible for developing future options for our Houston refinery. Please join me in welcoming Aaron to this call.

Aaron Litigate: Most recently <unk> was responsible for the manufacturing and commercial operations for our O N P Americas segment.

Aaron Litigate: Where he was also responsible for developing future options for all of our Houston refinery.

Peter Z. E. Vanacker: And we see other encouraging signs that the industry is beginning to recover. For example, the ratio of oil to gas prices strongly favors LYB's advantaged production in North America and the Middle East. Our olefins and polyolefins, Europe, Asia, and international segments have returned to profitability, and we're seeing early indications of improvement in the performance of our APS segment. The second key message is that LyondellBasell's focused strategy is creating unique opportunities to transform our business. As you have heard me say many times, we are executing on three strategic pillars.

Aaron Litigate: Please join me in welcoming Erin to this call.

Aaron Litigate: Before we dive into the results I Hope you would invest some time to review this year sedation of our sustainability report that we released a few weeks ago.

Aaron Litigate: Over the past year, we embedded sustainability into our strategy and made significant progress on our ambitions.

This year's sustainability report describes how well do I b is making everyday sustainability a reality.

Let's turn to slide three and begin the discussion with our continued leadership in safety performance.

Aaron Litigate: There is no greater accomplishments then having every member of our team return home to their families. Every day in the same house has when they began their working day.

Peter Z. E. Vanacker: We're growing and upgrading our core businesses through the startup of our new POTBA capacity and the acquisition of our NETBED joint venture in the Middle East. We intend to give a more substantive update on this pillar of our strategy during our second quarter results. And we're stepping up our performance and culture to embrace value creation through our value enhancement program and the transformation of our APS segment. As you might recall, we gave a detailed update on our VEP during last quarter's results.

Aaron Litigate: This is a cornerstone of our successful and sustainable business.

Aaron Litigate: So I know about sales first quarter incident rates for employees and contractors improved to a rate of only one injury 2 million hours worked.

Aaron Litigate: We believe our safety metrics continue to hold a leading position in our industry.

Speaker Change: And I want to congratulate our team for their outstanding safety performance.

Speaker Change: Moving to slide four as we discuss our company's performance during today's teleconference. We hope you will take away two main messages.

Peter Z. E. Vanacker: As we discuss our company's performance during today's teleconference, we hope you will take away two main messages. First, LyondellBasell continues to generate resilient results while managing challenging market conditions which have pressured our industry over the past two years. In the first quarter, LYB increased its EBITDA modestly over the fourth quarter. However, our cash generation was negatively impacted by a built-in working capital for good reasons, higher prices, and

Speaker Change: First <unk> continues to generate resilient results, while managing challenging market conditions, which have pressured our industry over the past two years.

Peter Z. E. Vanacker: But the most impactful transformation is the progress we have made on our strategic pillar to build a profitable circular and low carbon solutions business. The so-called CLCS business will move our feedstocks away from fossil fuels towards an increasing share of recycled and renewable sources. We're building this business through a disciplined, capital-efficient strategy that leverages our existing infrastructure and our competitive advantages, such as leading positions in growing markets and a global network of deep customer relationships.

Speaker Change: In the first quarter <unk> increased its EBITDA modestly over the fourth quarter.

Speaker Change: Our cash generation was negatively impacted by a build in working capital for good reasons higher prices and higher volumes.

Speaker Change: And we see other encouraging signs that the industry is beginning to recover.

Speaker Change: The ratio of oil to gas prices strongly favors <unk> advantage production in North America, and the Middle East.

Peter Z. E. Vanacker: In addition to the first quarter improvements in our underlying businesses, I hope you will come away from this call with an improved understanding of our progress in building CLCS and share our excitement for the future of LyondellBasell. Moving to slide five, let's focus on the actions we are taking to build a profitable CLCS business. LYB is targeting capabilities across the circular and low carbon solutions value chain. We're making a series of strategic investments in plastic waste sourcing, advanced sorting, mechanical recycling, and advanced recycling.

Speaker Change: Our olefins <unk> Polyolefin, Europe Asia and International segment has returned to profitability.

Speaker Change: And we're seeing early indications of improvements in the performance of our Aps segment.

Speaker Change: The second key message is that line robot sales focused strategy is creating unique opportunities to transform our business.

Speaker Change: As you have heard me say many times, we are executing on three strategic pillars.

Speaker Change: Growing and upgrading of our core businesses through the startup of our new P O TBA capacity and the acquisition of our net joint venture in the Middle East.

Peter Z. E. Vanacker: Slide 5 illustrates how all of these investments fit together to form a comprehensive approach to value creation for the LyondellBasell CLCS business. Our investments in waste sourcing and advanced sorting enable our company to maximize value from a wide variety of recycled and renewable waste streams. Our network will allow LYB to select the highest value proposition for a particular waste feedstock, whether that involves mechanical recycling, advanced recycling, or renewables. We continue to use JV structures where appropriate to improve capital efficiency and build in supply chain resiliency, while growing scale and gaining access to market-leading technology.

Speaker Change: We intend to give a more substantive update on this pillar of our strategy during our second quarter results.

Speaker Change: Our stepping up our performance and culture to embrace value creation through our value enhancement program and the transformation of our Aps segment.

Speaker Change: As you might recall, we gave a detailed update on our EEP during last quarter's results.

Speaker Change: But the most impactful transformation is the progress we have made on our strategic pillar to build a profitable circles and low carbon solutions business.

Peter Z. E. Vanacker: But the most impactful transformation is the progress we have made on our strategic pillar to build a profitable circular and low-carbon solutions business. The so-called CLCS business will move our feedstocks away from fossil fuels towards an increasing share of recycled and renewable sources. We're building this business through a disciplined, capital-efficient strategy that leverages our existing infrastructure and our competitive advantages, such as leading positions in growing markets and a global network of deep customer relationships.

Speaker Change: The so-called see Lcs business will move our feedstocks away from fossil fuels towards an increasing share of our recycled and renewable sources.

Peter Z. E. Vanacker: Construction is underway in Germany at our Cologne integrated hub for our first advanced recycling asset using LYB's proprietary catalyzed technology, MORITEC, with a final investment decision expected next year for a second unit in Houston that will likely be twice the size of the German facility. We are evaluating options for the potential reuse of the hydrotreaters at our Houston refinery to purify recycled and renewable cracker feedstocks.

Speaker Change: We're building this business through a disciplined capital efficient strategy that leverages, our existing infrastructure and our competitive advantages such as leading positions in growing markets and.

Speaker Change: And a global network of deep customer relationships.

In addition to the first quarter improvements in our underlying business I Hope you will come away from this call with an improved understanding of our progress in building see Lcs and share our excitement for the future of Lyondellbasell.

Peter Z. E. Vanacker: In addition to the first quarter improvements in our underlying businesses, I hope you will come away from this call with an improved understanding of our progress in building CLCS and share our excitement for the future of LyondellBasell. Moving to slide five, let's focus on the actions we are taking to build a profitable CLCS business and LYB as targeting capabilities across the circular and low carbon solutions value chain. We're making a series of strategic investments in plastic waste sourcing, advanced sorting, mechanical recycling, and advanced recycling.

Peter Z. E. Vanacker: All of these capabilities enable LYB to leverage substantial investments in our existing cracker and polymerization capacities to process recycled and renewable feedstock. Finally, in collaboration with converters and brand owners, we bring the recycled and renewable content of these polymers to market through both direct channels and through the custom compounding solutions offered by our APS business. Using mass balancing, the majority of our sales volumes are sold under our well-known Circle N brand.

Speaker Change: Moving to slide five let's focus on the actions we are taking to build a profitable <unk> business.

Speaker Change: <unk> is targeting capabilities across this circular and low carbon solutions value chain.

We're making a series of strategic investments in plastic waste sourcing advanced sorting mechanical recycling and advanced recycling.

Speaker Change: Slide five illustrates how all of these investments fit together to form a comprehensive approach to value creation for <unk> business.

Peter Z. E. Vanacker: Turning to slide six, you can see how the focused execution of our CLCS strategy is resulting in rapid and meaningful growth in sales volumes for LYBs, recycled and renewable based polymers. In 2023, our volumes grew to 123,000 tons, doubling our 2022 sales. And we expect this excellent momentum will continue as we drive toward our 2030 target of at least 2 million tons per year.

Speaker Change: <unk> investments in waste sourcing and advanced sorting enabled our company to maximize value from a wide variety of recycled in a renewable waste streams.

Our network will allow <unk> to select the highest value proposition for a particular waste feedstock.

Speaker Change: Whether that involves mechanical recycling advanced recycling or renewables.

Speaker Change: We continue to use JV structures, where appropriate to improve capital efficiency and builds in supply chain resiliency.

Speaker Change: While growing scale and gaining access to market leading technologies.

Peter Z. E. Vanacker: Last year, at our Capital Markets Day, we outlined our financial targets for LyondellBasell's CNLCS business. We continue to expect an incremental EBITDA contribution of $500 million by 2027 and $1 billion by 2030 from this business. By expanding our regional hubs with disciplined acquisitions and organic growth, we are confident we can continue to build and strengthen the leadership position to serve this undersupplied market while generating attractive margins to achieve our financial targets

Speaker Change: Construction is underway in Germany at our Cologne integrated.

Speaker Change: Our first advanced recycling assets using <unk> proprietary capitalized technology <unk> with a final investment decision expected next year for a second unit in Houston that will likely be twice the size of the German facility.

Speaker Change: We are evaluating options for the potential re use of the hydro <unk> at all of our Houston refinery to purify recycled and renewable cracker feedstocks.

Peter Z. E. Vanacker: All of these capabilities enable LYB to leverage the substantial investments in our existing cracker and polymerization capacities to process recycled and renewable feedstocks. Finally, in collaboration with converters and brand owners, we bring the recycled and renewable content of these polymers to market through both direct channels and through the custom compounding solutions offered by our APS business. Using mass balancing, the majority of our sales volumes are sold under our well-known Circle N brand.

All of these capabilities enabled <unk> to leverage to substantial investments in our existing cracker and polymerization capacities to process recycled and renewable feedstocks.

Peter Z. E. Vanacker: Let's turn to slide 7 and summarize our financial results. During the first quarter, LyondellBasell's businesses delivered resilient results from our well-positioned and diverse portfolios. Earnings were $1.53 per share, and EBITDA was 1.1 billion dollars. During the quarter, cash from operating activities consumed about $100 million, and our balance sheet remained robust with $6.5 billion of available liquidity. Now, I will turn the call over to Michael first and then to each of the business leaders, who will describe our financial and segment results in more detail.

Speaker Change: Finally in collaboration with converters and brand owners, we bring the recycles and renewable content of these polymers to markets through both direct channels and through custom compounding solutions offered by our Aps business.

Speaker Change: Using mass balancing the majority of our sales volumes are sold under our well known circle and brands.

Speaker Change: Turning to slide six you can see how the focused execution of our <unk> strategy is resulting in a rapid and meaningful growth in sales volumes for <unk> recycled renewable based polymers.

Speaker Change: In 2023, our volumes grew to 123000 tons doubling our 2022 sales and.

Michael C. McMurray: Thank you, Peter, and good morning, everyone. Please turn to slide 8 and let me begin by addressing our cash generation. During the past four quarters, LyondellBasell generated $4.3 billion of cash from operating activities. Our team efficiently converted 93% of our EBITDA into cash over the last 12 months. At the end of the quarter, our cash balance was $2.3 billion. LYB's investment grade balance sheet remains strong and enables us to continue to execute on our strategy and grow profitably while increasing returns for our shareholders. Let's continue with slide nine and review the details of our capital deployment. During the first quarter, our businesses consumed about $100 million in cash from operating activities.

Speaker Change: And we expect this excellent momentum will continue as we drive towards our 2030 targets of at least 2 million ton per year.

Speaker Change: Last year at our capital markets day, we outlined our financial targets for Lyondellbasell <unk> business.

Speaker Change: We continue to expect an incremental EBITDA contribution of $500 million by 2027.

Speaker Change: And $1 billion by 2030 from this business.

By expanding our regional helps with disciplined acquisitions and organic growth. We are confidence we can continue to build and strengthen the leadership position to serve this under supplied markets, while generating attractive margins to achieve our financial targets.

Peter Z. E. Vanacker: Let's turn to slide 7 and summarize our financial results. During the first quarter, LyondellBasell's businesses delivered resilient results from our well-positioned and diverse portfolio. Earnings were $1.53 per share, and EBITDA was 1.1 billion dollars. During the quarter, cash from operating activities consumed about $100 million, and our balance sheet remained robust with $6.5 billion of available liquidity. Now, I will turn the call over to Michael first and then to each of the business leaders, who will describe our financial and segment results in more detail.

Speaker Change: Let's turn to slide seven and summarize our financial results.

Speaker Change: During the first quarter lineup <unk> businesses delivered resilient results from our well positions and diverse portfolio.

Michael C. McMurray: The EBITDA improvement was more than offset by a working capital build of just over $600 million. As Peter mentioned, our working capital build was for good reasons, including higher prices and higher volumes primarily within our O&P, EAI, and IND segments. NO and PEAI receivables increased with higher sales volumes as we benefited from the Red Sea logistic disruption. Our IND segment had higher receivables due to styrene price increases, and we rebuilt some oxyfuel inventories after fourth quarter maintenance.

Speaker Change: Earnings were $1 53 per share.

Speaker Change: EBITDA was $1 $1 billion.

Speaker Change: During the quarter cash from operating activities consumed about $200 million.

Speaker Change: And our balance sheet remains robust with $6 5 billion of available liquidity.

Speaker Change: Let me turn the call over to Michael first and then to each of the business leaders, who will describe our financial and segment results in more detail.

Michael McMurray: Thank you Peter and good morning, everyone.

Michael: Please turn to slide eight and let me begin by addressing our cash generation.

Michael: During the past four quarters Lyondellbasell generated $4 3 billion of cash from operating activities, our team efficiently converted 93% of our EBITDA into cash over the last 12 months.

Michael C. McMurray: Our resilient cash generation has resulted in $1.8 billion in return to shareholders over the last 12 months through both dividends and share repurchases. During the quarter, we successfully issued $750 million worth of bonds to refinance our 2024 maturity, which reduced our coupon rate by 25 basis points. Our balance sheet is in great shape. We have $11 billion in long-term debt with an average maturity of about 18 years and a 4% average cost of debt.

Michael: At the end of the quarter, our cash balance was $2 3 billion.

Michael: Okay.

Michael: <unk> investment grade balance sheet remains strong and enables us to continue to execute on our strategy and grow profitably, while increasing returns for our shareholders.

Michael: Let's continue with slide nine and review the details of our capital deployment.

Michael: During the first quarter, our businesses consumed about $100 million in cash from operating activities.

Michael: EBITDA improvement was more than offset by working capital build of just over $600 million.

Michael C. McMurray: I would now like to provide a brief overview of the results from each of our segments on slide 10. LyondellBasell's business portfolio delivered $1.1 billion of EBITDA during the first quarter, and profitability improved quarter over quarter in five of our six segments. In our O&P America segment, the absence of fourth quarter inventory valuation benefits sequentially impacted first quarter results. Conversely, our I&D and refining segments benefited from the absence of fourth quarter inventory valuation charges.

Michael: As Peter mentioned, our working capital build was for good reasons, including higher prices and higher volumes, primarily within our <unk> III and <unk> segments.

<unk> receivables increased with higher sales volumes as we benefited from the Red Sea logistics disruptions.

Michael: Our <unk> segment had higher receivables due to styrene price increases and we rebuilt some oxy fuel inventories after fourth quarter maintenance.

Michael: Our resilient cash generation has resulted in $1 8 billion returned to shareholders over the last 12 months through both dividends and share repurchases.

Michael C. McMurray: In our fourth quarter teleconference, we outlined $105 million of first quarter estimated EBITDA impact from planned maintenance in O&P Americas and refining. Additional unplanned downtime from winter storm Heather in Houston and other events increased the first quarter estimated EBITDA impact from downtime by approximately $150 million. Our estimate for second quarter planned maintenance EBITDA impacts remains at $30 million and is focused on a turnaround of one of the POSM units in Channelview.

Michael C. McMurray: Our resilient cash generation has resulted in $1.8 billion in return to shareholders over the last 12 months through both dividends and share purchases. During the quarter, we successfully issued $750 million worth of bonds to refinance our 2024 maturity, which reduced our coupon rate by 25 basis points. Our balance sheet is in great shape. We have $11 billion in long-term debt with an average maturity of about 18 years and a 4% average cost of debt.

Michael: During the quarter, we successfully issued $750 million worth of bonds to refinance our 2020 for maturity, which reduced our coupon rate by 25 basis points. Our balance sheet is in great shape, we have $11 billion in long term debt with an average maturity of about 18 years.

Michael C. McMurray: We continue to align our operating rates with market demand to optimize working capital. During the second quarter, we expect operating rates of 85% for our global olefins and polyolefins assets and 80% for our intermediates and derivative assets. With that, I'll turn the call over to Kim.

And a 4% average cost of debt.

Speaker Change: I would now like to provide a brief overview of the results from each of our segments on slide 10.

Kimberly A. Foley: I would now like to provide a brief overview of the results from each of our segments on slide 10. LyondellBasell's business portfolio delivered $1.1 billion of EBITDA during the first quarter, and profitability improved quarter over quarter in five of our six segments. In our O&P America segment, the absence of fourth quarter inventory valuation benefits sequentially impacted first quarter results. Conversely, our I&D and refining segments benefited from the absence of fourth quarter inventory valuation charges.

Speaker Change: [noise] Lyondellbasell business portfolio delivered $1 $1 billion of EBITDA during the first quarter.

Speaker Change: <unk> improved quarter over quarter, and five of our six segments and our <unk> Americas segment, the absence of fourth quarter inventory valuation benefits sequentially impacted first quarter results.

Kimberly A. Foley: Thank you, Michael. After more than 35 years in various leadership positions at LYB, I am very excited to assume responsibility for our O&P segment. Earlier in my career, I was the site manager for our largest site here in Channelview, Texas. It is an honor for me to now lead LyondellBasell's work to grow and upgrade these core businesses for our company. Let's begin the segment discussions on slide 11 with the performance of our Olefins and Polyolefins Americas segment. First quarter O&P Americas EBITDA was $521 million.

Speaker Change: Firstly, our R&D and refining segment benefited from the absence of fourth quarter inventory valuation charges.

Speaker Change: And our fourth quarter teleconference, we outlined $105 million, a first quarter estimated EBITDA impact from planned maintenance in <unk> Americas and refining additional.

Kimberly A. Foley: In our fourth quarter teleconference, we outlined $105 million of first quarter estimated EBITDA impact from planned maintenance in O&P Americas and refining. Additional unplanned downtime from winter storm Heather in Houston and other events increased the first quarter estimated EBITDA impact from downtime by approximately $150 million. Our estimate for second quarter plan maintenance EBITDA impacts remains at $30 million and is focused on a turnaround of one of the POSM units in Channelview.

Speaker Change: Unplanned downtime from winter storm, Heather in Houston, and other events increased the first quarter estimated EBITDA impact from downtime by approximately $150 million.

Kimberly A. Foley: Lower feedstock and energy costs, coupled with stable domestic polyethylene prices, were offset by lower volumes due to planned and unplanned downtime. Oliphant margins were supported by higher co-product pricing. As a reminder, fourth quarter results benefited from LIFO inventory valuation changes of $75 million.

Speaker Change: Our estimate for our second quarter planned maintenance EBITDA impacts remains at $30 million and is focused on a turnaround of one of the past some units and channel view.

Speaker Change: We continue to align our operating rates with market demand to optimize working capital during the second quarter, we expect operating rates of 85% for our global olefins, <unk> polyolefin assets and 80% for our intermediates and derivative assets with that I'll turn the call over to Kim Kim.

Kimberly A. Foley: During the first quarter, North American polyethylene demand continued to strengthen and, with the support of strong export markets, led to stable domestic prices despite new capacity entering the market. For the North American industry, domestic polyethylene sales volumes improved by more than 5% relative to the fourth quarter. The addition of new capacity to the North American market in 2023 has led to much higher exports from the region. During the first quarter, North American exports of polyethylene were significantly higher than the 2023 average. For LYB, our strong domestic share in North America resulted in approximately 30% of our first quarter sales going to export customers.

Kimberly A. Foley: Thank you Michael after more than 35 years in various leadership positions at <unk> I'm very excited to assume responsibility for <unk> and <unk> segments.

Kimberly A. Foley: Earlier in my career I wish to site manager for our largest site Sharron channel Your Texas.

It is an honor for me to now lead lined out the sales work to gorilla and upgrade these core businesses for our company.

Kimberly A. Foley: Let's begin the segment discussion on slide 11, with the performance of our olefins and Polyolefin Americas segment.

First quarter, <unk> Americas, EBITDA was $521 million.

Kimberly A. Foley: Lower feedstock and energy costs, coupled with stable domestic polyethylene prices were offset by lower volumes due to planned and unplanned downtime.

Kimberly A. Foley: Olefins margins were supported by higher co product pricing.

Kimberly A. Foley: In the second quarter, we expect feedstock and energy costs to remain relatively low, with LYB targeting higher operating rates following downtime in the first quarter. North American integrated polyolefin producers, including LYB, continue to benefit from a highly advantaged oil-to-gas ratio, leading to a significantly lower cost relative to oil-derived production. With the remainder of the U.S. polyethylene capacity now online, the market is well-supplied, and yet demand is keeping industry inventories relatively balanced at about 40 days of supply.

As a reminder, fourth quarter results benefited from LIFO inventory valuation changes of $75 million.

Kimberly A. Foley: During the first quarter, the North American polyethylene demand continued to strengthen and with the support of strong export markets led to stable domestic prices, despite new capacity entering the market.

Kimberly A. Foley: For the North American industry domestic polyethylene sales volumes improved by more than 5% relative to the fourth quarter.

Kimberly A. Foley: The addition of new capacity to the North American market in 2023 has led to much higher exports from the region.

Kimberly A. Foley: During the first quarter North American exports of polyethylene were significantly higher than 2023 average.

Kimberly A. Foley: We remain focused on aligning our operating rates to serve domestic and export market demand. As Peter mentioned, we are focused on growing our circular and low carbon solutions business to build our leadership in the attractive markets of premium recycled and renewable polymers. In February, we announced the acquisition of mechanical recycling assets from PreZero in Jarupa Valley, California. These assets extend our recycling footprint into the greater Los Angeles metropolitan area, providing good access to plastic waste feedstock in the region. We believe California offers a favorable backdrop to increase the recovery of plastic waste with better infrastructure, higher recycling rates, and supportive policies.

Kimberly A. Foley: For <unk>, our strong domestic share in North America resulted in approximately 30% of our first quarter sales going to the export customers.

Kimberly A. Foley: In the second quarter, we expect feedstock and energy costs will remain relatively low with LCD targeting higher operating rates following downtime in the first quarter.

North American integrated polyolefin producers, including <unk> continue to benefit from a highly advantaged oil to gas ratio, leading to a significantly lower cost relative to fly all derived production.

With the remainder of the U S polyethylene capacity now online the market is well supplied yet demand is keeping the industry inventories relatively balanced at about 40 days of supply.

Kimberly A. Foley: Please turn to slide 12 as we review the performance of our olefins and polyolefins Europe, Asia, and international segments. In the first quarter, higher volumes from nearshoring combined with increased demand from restocking drove improved results in Europe and Asia, resulting in EBITDA of $14 million. Additionally, throughout the quarter, logistical challenges in the Red Sea proved beneficial for local European producers, resulting in increased volumes and fixed cost recovery. In Europe, variable margins benefited from modest price increases that were mostly offset by higher feedstock costs.

Kimberly A. Foley: We remain focused on aligning our operating rates to serve domestic and export market demand.

Kimberly A. Foley: As Peter mentioned, we are focused on growing our circular and low carbon solutions business to build our leadership in the attractive markets of premium recycled and renewable based polymers.

Kimberly A. Foley: In February we announced the acquisition of mechanical recycling assets from pre zero and your group of Valley of California.

Kimberly A. Foley: These assets extend our recycling footprint and to the greater Los Angeles Metropolitan area, providing good access to plastic waste feedstock in the region.

Kimberly A. Foley: We believe California offers a favorable backdrop to increase the recovery of plastic waste with better infrastructure higher recycling rates and supportive policies.

Kimberly A. Foley: As we progress through the second quarter, we expect European olefins and polymers results to improve due to firm pricing, lower energy costs, and improved seasonal demand. In addition, we continue to monitor the slow and gradual return of Chinese demand.

Kimberly A. Foley: Please turn to slide 12, as we review the performance of our olefins and polyolefin.

Kimberly A. Foley: Europe Asia and international segment.

Kimberly A. Foley: In the first quarter higher volumes from near shoring combined with increased demand from restocking drove improved results in Europe, and Asia, resulting in EBITDA of $14 million.

Kimberly A. Foley: Finally, we are staying true to our commitment to grow and upgrade our core businesses. Our acquisition of the Saudi Arabian NetPET joint venture is expected to close in the coming months. The NetPET acquisition is an excellent example of LyondellBasell's strategy to drive long-term growth with advantaged assets.

Kimberly A. Foley: Additionally throughout the quarter logistical challenges in the Red Sea proved beneficial for local European producers, resulting in increased volumes and fixed cost recovery.

Kimberly A. Foley: And Europe variable margins benefited from modest price increases that were mostly offset by higher feedstock costs.

Kimberly A. Foley: As we progressed through the second quarter, we expect European olefins and polymers results to improve due to firm pricing lower energy cost and improved seasonal demand.

Kimberly A. Foley: In line with our sustainability goals, we signed another Renewable Power Purchase Agreement of 208 megawatts of generation capacity in Germany. With this new agreement, LyondellBasell is rapidly moving towards our 2030 target to supply at least half of our electricity from renewable sources. We now have more than 90% of our 2030 target sourced through agreements for wind and solar electricity capacity. Now, let's turn to slide 13 and discuss the results for the refining segment. First quarter EBITDA was $71 million. Fourth quarter 2023 results were impacted by LIFO charges of approximately $40 million.

Kimberly A. Foley: In addition, we continue to monitor the slow and gradual return of Chinese demand.

Finally, we are staying true to our commitment to grow and upgrade our core businesses are.

Kimberly A. Foley: Our acquisition of the Saudi Arabian net Pat joint venture is expected to close in the coming months.

Kimberly A. Foley: Net pet acquisition is an excellent example of Lyondellbasell strategy to drive long term growth with advantaged assets.

Kimberly A. Foley: In line with our sustainability goals, we signed another renewable power purchase agreement of 208 megawatts of generation capacity in Germany.

Kimberly A. Foley: With this new agreement Lyondellbasell is rapidly moving towards our 2030 target to supply at least half of our electricity from renewable sources.

Kimberly A. Foley: Now have more than 90% of our 2030 target sourced through agreements for wind and solar electricity capacity.

Kimberly A. Foley: Now, let's turn to slide 13, and discuss the results for the refining segment.

Kimberly A. Foley: The improvement in the gasoline crack spread was partially offset by lower volumes related to planned and unplanned downtime. As previously mentioned, we have implemented a hedging program for a portion of our distillate production to mitigate risk throughout 2024. However, during the first quarter, distillate cracks outperformed expectations, and our results include mark-to-market losses for the program.

Kimberly A. Foley: First quarter EBITDA was $71 million.

Kimberly A. Foley: Fourth quarter 2023 results were impacted by LIFO charges of approximately $40 million.

Improvement in the gasoline crack spread was partially offset by lower volumes related to planned and unplanned downtime.

Kimberly A. Foley: As previously mentioned, we have implemented a hedging program for a portion of our distillate production to mitigate risk throughout 2024.

Kimberly A. Foley: During the first quarter distillate cracks outperformed expectations and our results include a mark to market losses for the program.

Kimberly A. Foley: In the near term, we expect seasonally stronger demand for gasoline amid rising crude oil prices. We intend to maximize crew throughput at the refinery and operate at approximately 95% of capacity in the second quarter. Looking ahead, we remain committed to the safe and reliable operation of these assets, and we will continue to target high operating rates until ramp-down begins in the first quarter of 2025. Our team is evaluating several new projects to transform the site in support of our circular and low carbon solutions growth strategy. With that, I will turn the call over to Aaron.

Kimberly A. Foley: In the near term, we expect seasonally stronger demand for gasoline amid rising crude oil prices.

We intend to maximize crude throughput at the refinery and operated at approximately 95% of capacity in the second quarter.

Kimberly A. Foley: Looking ahead, we remain committed to the safe and reliable operation of these assets.

Kimberly A. Foley: We will continue to target high operating rates until ramped down begins in the first quarter of 2025 or.

Kimberly A. Foley: Our team is evaluating several new projects to transform the site in support of our circular and low carbon solution growth strategy.

Kimberly A. Foley: With that I will turn the call over to Aaron.

Aaron: Thank you Kim and thank you Peter for the kind introduction at the beginning of the call.

Aaron Ledet: Thank you, Kim, and thank you, Peter, for the kind introduction at the beginning of the call. Like Kim, I'm honored to have the opportunity to lead the Intermediate to Derivative segment. During my career at LyondellBasell, I have served in leadership roles touching on supply chain, APS, Europe, IND, refining, and most recently, leading O&P in the Americas. I look forward to my new responsibilities to drive value creation and growth across the core businesses within intermediates and derivatives at LYB. Please turn to slide 14 as we look at the Intermediates and Derivatives segment.

Aaron: Tim I'm honored to have the opportunity to lead the intermediates and derivatives segment.

During my career at Lyondellbasell I have served in leadership roles touching on supply chain Aps Europe IND.

Aaron: In refining and most recently, leading OMB and the Americans.

Aaron: I look forward to my new responsibilities to drive value creation and growth across the core businesses within intermediates and derivatives and <unk>.

Aaron: Please turn to slide 14, as we look at the intermediates and derivatives segment.

Aaron: In the first quarter segment EBITDA was $312 million.

Aaron Ledet: In the first quarter, segment EBITDA was $312 million. As a reminder, the fourth quarter results were impacted by LIFO charges of approximately $95 million. Our European propylene oxide and derivatives business benefited from logistics disruptions in the Red Sea leading to near-shoring of local demand that drove higher volumes and margins in the region, a dynamic which has continued into the second quarter. In the first quarter, OxyFuel's margins declined due to lower premiums for OxyFuel relative to gasoline.

Aaron: As a reminder, the fourth quarter results were impacted by LIFO charges of approximately $95 million.

Aaron: Our European propylene oxide and derivatives business benefited from logistics disruptions in the Red Sea, leading to near shoring of local demand that drove higher volumes and margins in the region.

Dynamic, which has continued into the second quarter.

Aaron: In the first quarter Oxy fuels margins declined due to lower premiums for oxy fuels relative to gasoline despite.

Aaron Ledet: Despite these headwinds, OxyFuel's margins remain more than double the level typically seen during the seasonally slow first quarter. Industry outages during the first quarter led to higher styrene margins that have since normalized in April. Looking ahead, we anticipate seasonal improvements across all businesses in the segment, including benefits from the summer driving season and lower butane costs, providing support for continued strength in oxyfuels margins. In line with our guidance from the beginning of the year, we have planned maintenance underway at one of our POSM assets in Channelview, Texas.

Aaron: Despite these headwinds oxy fuels margins remained more than double the level typically seen during the seasonally slow first quarter.

Aaron: Industry outages during the first quarter led to higher styrene margins that have since normalized in April.

Aaron: Looking ahead, we anticipate seasonal improvements across all businesses in the segment include.

Aaron: Including benefits from the summer driving season, and lower butane cost providing support for continued strength and oxy fuels margins.

Aaron: In line with our guidance from the beginning of the year, we have planned maintenance underway at one of our <unk> assets in channel view, Texas.

Aaron Ledet: We expect higher volumes across most of our business following unplanned downtime in the first quarter. Our team continues to do a fantastic job running our new POTVA facility with high reliability and utilization while ensuring superb product quality. After considering planned maintenance, we expect to operate at an average rate of about 80% of IND capacity during the second quarter. The process to complete the sale of our ethylene oxide derivatives businesses to INEOS is well underway, and we expect to finalize the transaction in the second quarter. We anticipate a book gain on sale of $275 million, which will be reflected as an identified item during the second quarter. With that, I will turn the call over to Torkel.

Aaron: We expect higher volumes across most of our business following unplanned downtime in the first quarter.

Aaron: Our team continues to do a fantastic job in running our new TBA facility with high reliability and utilization, while ensuring superb product quality.

Aaron: After considering planned maintenance, we expect to operate at an average rate of about 80% of R&D capacity during the second quarter.

Aaron: The process to complete the sale of our ethylene oxide derivatives derivatives businesses to any of US is well underway and we expect to finalize the transaction in the second quarter.

Aaron: We anticipate a book gain of on sale of $275 million, which will be reflected as an identified item during the second quarter.

Aaron: With that I will turn the call over to total.

Total: Thank you Aaron Let's review the first quarter results for the advanced polymer solutions segment on slide 15.

Torkel Rhenman: Thank you, Aaron. Let's review the first quarter results for the Advanced Polymer Solutions segment on slide 15. First quarter EBITDA was $35 million. Volumes increased 12% across our portfolio, driven by improving seasonal demand and the lack of typical fourth quarter customers downtown. Variable margins increased due to higher pricing and product mix improvement. However, this was offset by fixed cost investments during the quarter as we move forward on our APS transformation. In the second quarter, we expect volumes will continue to show modest improvement, benefiting from both seasonally higher demand and our growing pipeline of new business.

Total: First quarter EBITA was $35 million.

Total: Volumes increased 12% across our portfolio driven by improving seasonal demand and the lack of typical fourth quarter customer's downtime.

Total: Variable margins increased due to higher pricing and product mix improvements.

This was offset by fixed cost investments during the quarter as we move forward on our Aps transformation.

Total: In the second quarter, we expect volumes will continue to show modest improvement benefiting from both seasonally higher demand and our growing pipeline of new business.

Total: We continue to see good momentum as we expand our growth funnel with our team highly focused on winning projects with both new and existing customers.

Torkel Rhenman: We continue to see good momentum as we expand our growth funnel, with our team highly focused on winning projects with both new and existing customers. Utilizing both our recently acquired MEPL assets as well as our existing asset base, we are providing customers with innovative and sustainable solutions. We believe that our APS transformation, coupled with the market recovery, will deliver results to reach the goals we laid out at our Capital Markets Day last year. With that, I will return the call to Peter.

Total: Utilizing both our recently acquired metal assets as well as our existing asset base, we are providing customers with innovative and sustainable solutions.

Total: We believe that our Aps transformation, coupled with market recovery will deliver results to reach the goals, we laid out at our capital markets day last year.

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

Peter Z. E. Vanacker: Thank you, Torkel, and please turn to slide 16, and I will discuss the results for the technology segment on behalf of James Seward. First quarter EBITDA of $118 million reflected higher licensing revenue and improved catalyst margin. In the second quarter, we expect that revenue associated with licensing milestones will decrease, matching fourth quarter 2023 levels, but will be slightly offset by increased catalyst volumes. As a result, we estimate that second quarter technology segment results will be similar or perhaps slightly better than fourth quarter results.

Peter Z. E. Vanacker: Thank you Darko and please turn to slide 16, and I will discuss the results for the technology segment on behalf of Jim Stewart.

Peter Z. E. Vanacker: First quarter EBITA of 100.

Peter Z. E. Vanacker: $18 million reflected higher licensing revenue and improved catalysts margins.

Peter Z. E. Vanacker: In the second quarter, we expect that revenue associated with licensing milestones will decrease matching fourth quarter 2023 levels.

Peter Z. E. Vanacker: But will be slightly offset by an increased catalyst volumes.

Peter Z. E. Vanacker: As a result, we estimate that second quarter technology segment results will be similar or perhaps slightly better than fourth quarter results.

Peter Z. E. Vanacker: Please turn to slide 17 as we discuss the near-term market outlook by region and by market. As you heard from our business leaders, we expect to see typical increases in seasonal demand along with some moderate improvements in markets throughout the year. In the Americas, improving export demand for polyethylene is expected to further tighten domestic markets.

Please turn to slide 17, as we discuss our near term market outlook by regions and end markets.

Peter Z. E. Vanacker: As you heard from our business leaders, we expect to see typical increases in seasonal demand along with some moderate improvements in markets throughout the year.

Peter Z. E. Vanacker: In the Americas, improving export demand for polyethylene is expected to further tighten domestic markets.

Peter Z. E. Vanacker: Additionally, low ethane costs should continue to strengthen integrated polyethylene margins. As we move through the year, we expect European markets will begin to see modest improvements. Industrial activity in the region is increasing, and we expect demand to continue to recover as long as energy costs gradually improve confidence. The Red Sea logistics disruptions that bolstered first quarter demand continue to influence local purchasing decisions. China's markets are exhibiting very slow but steady improvements. We're encouraged by China's targeted stimulus efforts and remain watchful for indications that these measures will deliver meaningful improvements in demand for LYB's products. For the packaging sector, demand for non-durables has been consistent.

And additionally, low ethane costs should continue to strengthen integrated polyethylene margins.

Peter Z. E. Vanacker: As we move through the year, we expect European markets will begin to see modest improvements.

Peter Z. E. Vanacker: Industrial activity in the region is increasing and we expect demand will continue to recover as low energy costs gradually improve confidence.

The Red Sea logistics disruptions that bolstered first quarter demands continue to influence local purchasing decisions.

Peter Z. E. Vanacker: China market saw exhibiting very slow but steady improvement.

Peter Z. E. Vanacker: We're encouraged by China's targeted stimulus efforts and we remain watchful for indications that these measures will deliver meaningful improvements in demand for <unk> products.

Peter Z. E. Vanacker: Yeah.

Peter Z. E. Vanacker: For the packaging sector demand for non durables has been consistent.

Peter Z. E. Vanacker: Given that restocking across the packaging value chain seems to be complete, we look forward to the potential for restocking ahead. In building and construction, we expect to see some benefits from moderating and perhaps falling interest rates and the inevitable recovery in demand for durable goods. In the US, stimulus funding from the bipartisan infrastructure law will begin to support improving demand for commercial construction, with growing benefits expected as the year unfolds.

Peter Z. E. Vanacker: Given that destocking across the packaging value chain seems to be complete we look forward to the potential for restocking ahead.

Peter Z. E. Vanacker: And building and construction, we expect to see some benefits from other rating and perhaps falling interest rates and the inevitable recovery in demand for durable goods.

Peter Z. E. Vanacker: In the U S stimulus funding from the beep partisan infrastructure law will begin to support improving demand for our commercial construction, we have growing benefits expected as the year unfolds.

Peter Z. E. Vanacker: In the automotive sector global production is expected to modestly improve from first quarter levels throughout 2024.

Peter Z. E. Vanacker: In the automotive sector, global production is expected to modestly improve from first quarter levels throughout 2024. Moreover, our APS segment is committed to strategic initiatives focused on winning back customers and growing the business. And then oxyfuels and refining gasoline crack spreads are improving from the lows we saw at the end of the fourth quarter of last year. U.S. vehicle miles traveled have returned to pre-pandemic levels, and the value for octane from our oxyfuels is strong.

Peter Z. E. Vanacker: Moreover, our Aps segment is committed to strategic initiatives focused on winning back customers and growing the business.

Peter Z. E. Vanacker: And then obviously fuels and refining gasoline crack spreads are improving from the lows. We saw at the end of the fourth quarter of last year.

Peter Z. E. Vanacker: U S vehicle miles traveled have returned to pre pandemic levels and the value for octane from our oxy fuels is strong.

At <unk>, we continued to optimize our assets on a global scale by aligning our operating rates to meet market demand and maximize cash generation.

Peter Z. E. Vanacker: At LYB, we continue to optimize our assets on a global scale by aligning our operating rates to meet market demands and maximize cash generation. Now, let me summarize the first quarter, our outlook, and our long-term strategy for the company on slide 18. As we move into the summer months, we anticipate seasonal improvements across our businesses in the second quarter. Moving through the year, we expect improvement in the second half, driven by stable to lower interest rates and modestly higher demand.

Peter Z. E. Vanacker: So let me summarize the first quarter, our outlook and our long term strategy for the company with slide 18.

Peter Z. E. Vanacker: As we move into the summer months.

Peter Z. E. Vanacker: We anticipate seasonal improvements across our businesses in the second quarter.

Peter Z. E. Vanacker: Moving through the year, we expect improvement in the second half driven by stable to lower interest rates and modestly higher demands.

Peter Z. E. Vanacker: <unk> U S and middle East production should continue to benefit from advantaged natural gas based feedstock and energy costs compared to oil based peers, Betsy logistic disruptions were beneficial to our European businesses in the first quarter of 2024 and the time it will.

Peter Z. E. Vanacker: LYB's U.S. and Middle East production should continue to benefit from advantaged natural gas-based feedstock and energy costs compared to oil-based peers. Red Sea logistic disruptions were beneficial to our European businesses in the first quarter of 2024, and the time it will take for these tailwinds to fade is uncertain.

Peter Z. E. Vanacker: For these tailwind to fate is uncertain.

Peter Z. E. Vanacker: As we mentioned in our fourth quarter earnings call, we are committed to delivering $600 million of recurring annual EBITDA by the end of 2024 through our value enhancement program. We continue to see enthusiastic support for the program across the company as it becomes an evergreen part of our culture. Our team will continue to remain focused on advancing value creation through the three pillars of our long-term strategy. Progress continues on growing and upgrading our core business.

Peter Z. E. Vanacker: As we mentioned in our fourth quarter earnings call. We are committed to delivering $600 million of recurring annual EBITDA by the end of 2024 through over to value enhancement program.

Peter Z. E. Vanacker: We continue to see enthusiastic support for the program across the company as it becomes an evergreen part of our culture.

Peter Z. E. Vanacker: Our team will continue to remain focused on advancing value creation through the three pillars of our long term strategy.

Peter Z. E. Vanacker: Progress continues on growing and upgrading of our core businesses in the coming months, we expect to close on the acquisition of our netback propylene and 40 propylene joint venture in Saudi Arabia.

Peter Z. E. Vanacker: In the coming months, we expect to close on the acquisition of our Netbet Propylene and Polypropylene joint venture in Saudi Arabia. Additionally, our divestiture of ethylene oxide and derivatives business to INEOS is expected to occur during the second quarter.

Peter Z. E. Vanacker: Or does that suggest that your of ethylene oxide and derivatives business to ineos expected to occur during the second quarter.

Peter Z. E. Vanacker: As we discussed today, NLYB continues to build a comprehensive business model to support a profitable circular and low-carbon solutions business. LyondellBasell is making smart investments to build capabilities across every step of the value chain with a global scale in mind. With construction already underway for our first Moritik Advanced Recycling Asset in Germany, we're building on this momentum with FID for our second larger unit in Houston planned for 2025. Our actions demonstrate LYB's commitment to capture value with circular and low-carbon solutions.

Peter Z. E. Vanacker: As we discussed today <unk> continues to build a comprehensive business model to support our profitable circular in low carbon solutions business.

Peter Z. E. Vanacker: <unk> is making smart investments to build capabilities across every step of the value chain with a global scale in mind.

Peter Z. E. Vanacker: With construction already on their way for our first <unk> advance recycling assets in Germany. We are building on this momentum with <unk> for our second larger units in Houston plans for 2025.

Peter Z. E. Vanacker: Our actions demonstrate <unk> commitment to capture value with circular and low carbon solutions.

Peter Z. E. Vanacker: Our value enhancement program continues to grow.

Peter Z. E. Vanacker: Our value enhancement program continues to grow and is a key element of our company culture. Currently, the program is on track to add up to $1 billion of incremental recurring annual EBITDA by the end of 2025, significantly surpassing our original goals. We're laser focused on our target to deliver a more profitable and sustainable growth engine for LyondellBasell.

Peter Z. E. Vanacker: A key element of our company culture.

Peter Z. E. Vanacker: Currently the program is on track to add up to $1 billion of incremental recurring Honeywell EBITDA by the end of 2025 significantly surpassing our original goals.

Peter Z. E. Vanacker: We're laser focused on our target to deliver a more profitable and sustainable growth engine for Lyondellbasell.

Operator: And with that, we're pleased to take your questions. Thank you. Ladies and gentlemen, at this time, we'll begin the question and answer session. As a reminder, 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 you to limit yourself to one question. Our first question comes from...

Speaker Change: With that we're pleased to take your questions.

Speaker Change: Thank you ladies and gentlemen at this time, we will begin the question and answer session.

Speaker Change: A reminder, if you have a question. Please press the star followed by the one on your Touchtone phone.

Speaker Change: If you would like to withdraw your question. Please press the star followed by the Q.

We do ask you to limit to one question.

Speaker Change: Our first question comes from the line of Steve Byrne with Bank of America. Please proceed with your question.

Operator: Thank you. Ladies and gentlemen, at this time, we'll begin the question and answer session. As a reminder, 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 you to limit yourself to one question. Our first question comes from the line of Steve Byrne with Bank of America. Please proceed with your question.

Stephen V. Byrne: Yes. Thank you.

Stephen V. Byrne: I'm interested in the level of demand that you're hearing from your downstream polyethylene customers.

Stephen V. Byrne: For your renewable.

Stephen V. Byrne: Okay.

Stephen V. Byrne: Sure.

Stephen V. Byrne: Okay.

Stephen V. Byrne: John.

Stephen V. Byrne: Yeah.

Stephen V. Byrne: Alright.

Stephen V. Byrne: Got it.

Stephen V. Byrne: Sure.

Stephen V. Byrne: Yeah.

Stephen V. Byrne: Contrary.

Stephen V. Byrne: Okay.

Stephen V. Byrne: Yeah.

Stephen V. Byrne: Cost plus.

Stephen V. Byrne: Okay.

Stephen V. Byrne: Yes.

Stephen V. Byrne: Great.

Stephen V. Byrne: Thank you.

Stephen V. Byrne: Hi, Steve. Thanks for your question this is Peter.

Peter Z. E. Vanacker: Hi Steve. I mean, thanks for your question. This is Peter.

Peter Z. E. Vanacker: It was a bit difficult, I mean, to understand the line was breaking up, but you were asking for our level of demand on the renewable side of polyethylene, as well as whether this is cost plus or not. Well, we continue to see very good traction in that market. You saw from our presentation that last year we doubled, approximately, the volumes of our circle and family, so the mechanical recycles, the advanced recycles, and as well as the non-plastic waste renewables, so bio-waste recycled products.

Peter Z. E. Vanacker: It was a bit difficult to understand the line was breaking up.

Peter Z. E. Vanacker: But you were asking for our level of demands on the renewable side of polyethylene as.

Peter Z. E. Vanacker: As well as.

Peter Z. E. Vanacker: It is cost plus or not while we continue to see very good traction there.

Peter Z. E. Vanacker: That market yourself from our presentation that last year, we doubled approximately to volumes.

Peter Z. E. Vanacker: Of our circle and assembly, so the mechanical recycles the advanced recycles.

Peter Z. E. Vanacker: Well, the non plastic waste renewable so biowaste recycled products.

Peter Z. E. Vanacker: Yes.

Peter Z. E. Vanacker: We have continued to see very good demands.

Peter Z. E. Vanacker: We have continued to see very good demand in that regard. We also see that regulation is advancing, particularly in Europe, with regard to contract structures. If we take our first investments in advanced recycling technology, our Moritec technology in the Cologne hub in Westerling, then we have a big part of the capacity already contracted. We do not contract the entire capacity on purpose because we believe there will be value that we can capture for that part that is not contracted once we start up the facility.

Peter Z. E. Vanacker: Best regards we see also that regulation is advancing.

Peter Z. E. Vanacker: Particularly in Europe.

Peter Z. E. Vanacker: With regards to the contract structures.

Peter Z. E. Vanacker: If we take our first investments in the advance recycling technology over more of a fixed technology in the Cologne hub and Wessling.

Peter Z. E. Vanacker: And then we have a big part of the capacity already contracted.

Speaker Change: We on purpose do not contract the entire capacity because we believe there will be value that we can capture.

Speaker Change: For that part that is not contracted.

Speaker Change: Once we start up the facility.

Peter Z. E. Vanacker: We are, and we are not contracting. On a cost-plus basis, I said that multiple times, this market will have its own supply and demand, and that is actually what we are currently seeing. That means that pricing for renewable, recycled polyethylene, but also polypropylene, has its own price points that are being set in the marketplace.

Speaker Change: We are.

Speaker Change: We are not contracting.

Speaker Change: On a cost plus basis, I've said that multiple times.

Speaker Change: These markets will have its own supply and demand and that is actually what we currently are seeing that means that pricing for renewable recycles.

Speaker Change: Year to date, but also polypropylene.

It has its own price points that is being set in the marketplace.

Peter Z. E. Vanacker: And all that we see is still very much aligned, even ahead of what we had set in March last year at the capital market stage. Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Hi, good morning.

Speaker Change: All of that we see is still very much aligned even ahead of what we had set in March last year at the capital markets day.

Speaker Change: Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Please proceed with your question.

Hi, good morning, So <unk> seems to be seeing some nice benefits from volume trends and firmer prices, particularly in Europe, how do you expect prices to trend into the second quarter and throughout the year.

Operator: Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Please proceed with your question.

Any sense you know we may see some reversal in this near shoring and restocking trends that you've highlighted.

Peter Z. E. Vanacker: Good question, Patrick. And, of course, we are very pleased that the situation is changing in Europe, which, as you alluded to, and as we said in the prepared remarks, helped by discontinuity because of the issues in the Red Sea. Generally speaking, and then I will hand over to Kim. Generally speaking, we see that situation not changing very rapidly because the behavior of our customers has changed so that they are buying more locally than eventually relying on cheap imports. So therefore, we expect, as we alluded to in the prepared remarks, to see further advancement in our profitability in that particular region in the second quarter. Kim, do you want to add something to that?

Speaker Change: Good question, Patrick and of course, we are very pleased that we see that.

Speaker Change: The situation is changing in Europe of course, as you alluded to and as we sit in the prepared remarks.

Speaker Change: <unk> bye.

Speaker Change: Discontinued to discontinue with <unk> because of the issues in the Red Sea.

Speaker Change: Generally spoken and then I will hand over to Kim generally spoken.

Speaker Change: We see that situation not changing very rapidly.

Speaker Change: Because.

Speaker Change: Yeah.

Behavior of our customers.

Kimberly A. Foley: That has changed that they are buying more locally than eventually relying on the cheap imports.

Kimberly A. Foley: So therefore, we expect as we alluded to in the prepared remarks, I mean to see further advancements in our profitability in that particular region in the second quarter.

Kimberly A. Foley: Jim you want to add something to that I think the only thing that I would add Peter as you know we continue to see strength in packaging, which you alluded to in our prepared remarks and <unk>.

Peter Z. E. Vanacker: I think the only thing that I would add, Peter, is that we continue to see strength in packaging, which you alluded to in our prepared remarks, and, you know, none of us can predict what's going to happen with the supply chains. And so long as that thread is out there, I think we'll continue to see more nearshoring, and another topic.

James Malcolm Seward: No none of us can predict what's going to happen with the supply chains and so long as that trend is out there I think we'll continue to see more near shoring.

Peter Z. E. Vanacker: And another topic that I want to point out is that everybody has noticed that in Europe there are consolidation announcements in the markets. So if you do the back of the envelope calculation of, in total, now the three announcements that have been made.

James Malcolm Seward: And another topic that I want to point out as everybody has noticed that <unk> in Europe.

James Malcolm Seward: There is consolidation announcements in the markets.

James Malcolm Seward: So if you do.

James Malcolm Seward: The back of the envelope calculation of in total no. The three announcements that have been made.

Peter Z. E. Vanacker: Then we're talking about approximately one and a half million tons of ethylene capacity that, let's say, relatively short term, should disappear from the markets. Another point that I want to allude to is that the average age of crackers in Europe is about 45 years, whereby in the United States, it's less than 30 years. There are about 40 crackers in Europe, and close to half of them have a capacity that is less than 500,000 tons per year.

James Malcolm Seward: Then we're talking about approximately one 5 million tons of ethylene capacity.

James Malcolm Seward: In.

James Malcolm Seward: Let's say relatively short term should disappear in the markets.

James Malcolm Seward: Another point that I want to allude to is that the average age of crackers in Europe is about 45 years.

James Malcolm Seward: Whereby in Europe, and the United States is less than 30 years.

James Malcolm Seward: There are about 40 crackers in Europe.

James Malcolm Seward: Close to half of them have a capacity that is lower than 500000 tons per year.

Peter Z. E. Vanacker: So you see that restructuring is actually starting to happen in Europe, and if these announcements are being made, then we would expect that to be taken into consideration. In the value chain, that means our customers and customers of our customers, where they want to secure their product. Having said that, we do not see yet in Europe that there is restocking. So what Kim was alluding to is mainly based upon higher demand because of higher consumption downstream of products being produced, so it's not yet restocking.

James Malcolm Seward: So youll see that restructuring is actually starting to happen in.

James Malcolm Seward: In Europe, and if these announcements or being made then we would expect also that that is being taken into consideration.

James Malcolm Seward: The value chain that means our customers and customers of our customers and where they want to secure that.

James Malcolm Seward: Their products.

James Malcolm Seward: Having said that we do not see yet in Europe, there was restocking.

James Malcolm Seward: So what Kevin was alluding to is mainly based upon prior demands because of prior consumption downstream of products being produced so it's not yet restocking.

Operator: Thank you. Our next question comes from the line of Frank Mitsch with Fermium Research. Please proceed with your question.

James Malcolm Seward: Thank you. Our next question comes from the line of Frank Mitsch with Fermium Research. Please proceed with your question.

Peter Z. E. Vanacker: Good morning and congratulations, Kim, on the new role. Why don't we stay with Europe for a minute or two? First off, you indicated that global O&P operates, you expect, at 85% in the second quarter. Curious what the split might be, Americas versus Europe.

Frank Joseph Mitsch: Good good morning, and congrats Kim on the new role why don't we stay with Europe for a minute or two.

Frank Joseph Mitsch: First off I know you indicated that global RMP op rates, you expect that 85%.

Frank Joseph Mitsch: In the second quarter curious, what the split might be Americas versus Europe, but it does seem that the.

Peter Z. E. Vanacker: But it does seem that the business is catching a break with the Red Sea issues. And to your point, Peter, you also indicated that you were starting to see some rationalizations and so forth. You have already taken some actions. Is there more that we should be expecting to happen in Europe? Theoretically, the threat in the Red Sea will be neutralized, and then we'll start to see global trade flows again, and that will obviously appear to catalyze some action, so any color there will be very helpful. Thank you.

Frank Joseph Mitsch: The business is catching a break with the Red Sea.

Frank Joseph Mitsch: Issues.

Frank Joseph Mitsch: And to your point Peter you also indicated that you were starting to see some rationalizations and so forth.

Frank Joseph Mitsch: You have already taken some actions is there is there more that we should be expecting to happen in Europe theoretically.

Frank Joseph Mitsch: The threat.

Frank Joseph Mitsch: In the Red Sea will be neutralized and then we'll start to see the global trade flows again and that will obviously appear.

Speaker Change: Appear to catalyze some action so any any color there would be very helpful. Thank you.

Peter Z. E. Vanacker: Let me take the latter part of your question. Very good question, as usual, Frank.

Speaker Change: Let me take the latter part of your question very good question as usual Frank the latter parts I mean around.

Peter Z. E. Vanacker: The latter part, I mean, around our assets, you rightfully said. We took a very early step when the industry was not undertaking any steps yet by rationalizing our 40-propylene facility, the one line in the southern part of Italy, in Brindisi. Of course, we've always said that we continue to look at all the different assets that we have in Europe, taking into consideration that we have flexible assets in Europe compared to some other assets that are still there in the industry that are not flexible, that are subscale, and that are dealing with high costs.

Speaker Change: Our assets you rightfully said we.

Speaker Change: Very early step when the industry was not undertaking any steps yet by rationalizing.

Speaker Change: 40 propylene facility so.

One line in the southern part of Italy, and Britain Dizzy.

Speaker Change: Of course, we've always said that we continue to look at all the different assets that we have.

Speaker Change: In Europe.

Speaker Change:

Speaker Change: Taking into consideration that we have flexible assets.

Speaker Change: In Europe compared to some other assets that are still there in the industry that are not flexible in our sub scaled it through our dealing with the high costs that we have a quite good position with our assets. If you look at the cash cost curve.

Peter Z. E. Vanacker: We have a quite good position with our assets if you look at the cash cost curve in Europe. But, nevertheless, as we said before, we continue to strategically evaluate our positions in Europe. As I alluded to before, we are quite positive about the dynamics around new regulation that supports the demands for recycled products. And therefore, we've also said, I mean, our Cologne assets are very strategic in that regard; we're building up our Cologne facility around, I mean, renewable resources for the elephants, around advanced recycling with the Morotec investment, so that will continue to get a lot of focus as we move forward. On the short-term question with the Red Sea, anything that we can add? I mean, can I think I want to go back to the first part of it?

Speaker Change: In Europe, but nevertheless, as we said before we continue to strategically evaluate.

Our positions in Europe.

Speaker Change: As I alluded to before we are quite positive.

Speaker Change: By the dynamics.

Speaker Change: The rounds.

Speaker Change: New regulation that supports the demands for recycled products.

Speaker Change: And therefore, we are also certainly nowhere Cologne.

Speaker Change: Cologne assets were very strategic in that regards we are building up our Cologne apps.

Speaker Change: Around renewable.

For the olefins around advanced recycling.

With the <unk> investments so that will continue to get a lot of focus.

Speaker Change: As we move forward.

Speaker Change: On the short term question with the Red Sea anything that we cannot I mean Kim.

Kimberly A. Foley: I think I want to go back to the first part of Frank's question just to answer that. As many of you saw in the prepared remarks and the releases this morning, our first quarter North American olefins and polyolefins operations operated our crackers at about 75 percent. So you asked the question about operating rates for global OPAM. I would say OPAM or global O&P Americas as well as global Europe, Asia, and international are both at 85 percent in the second half or the second quarter of the year.

Speaker Change: I think I want to go back to the first part of the Franks question just to answer that as no.

Speaker Change: Any of you saw it in the prepared remarks in our releases this morning.

First quarter, North American olefin, and polyolefin split operated our crackers at about 75%. So you asked a question about operating rates for global.

Speaker Change: Pam I would say Oh Pan our global <unk> Americas, as well as global Europe Asia and international are both at 85% in the second half of the or the second quarter of the year.

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

Kimberly A. Foley: Thank you. Our next question comes from the line of Matthew Blair with Tudor Pickering Halt. Please proceed with your question.

Matthew Robert Lovseth Blair: Hey, good morning.

Matthew Robert Lovseth Blair: So your outlook for pricing in the second quarter as well as the back half of the year.

Matthew Robert Lovseth Blair: Is it fair to say that.

Matthew Robert Lovseth Blair: Export demand right now is stronger than domestic demand for PPE and then also could you talk a little bit about just overall inventory levels.

Peter Z. E. Vanacker: Thank you, Matthew. Before I hand over to Kim, let me point out that we are, of course, very pleased to see that domestic demand in the United States has improved by 5% versus Q4 last year. I'm reminding everybody that this is the strongest quarter since Q3 2022. In addition to that, as you rightfully said, export sales continue to grow, actually breaking records for the fourth consecutive quarter, which is not so much of a surprise if you look at the cost base and if you see the differential between oil and gas. So these are very good dynamics that we see in the marketplace for PE and for producers like ourselves with a very low cost basis in the Gulf.

Speaker Change: Thank you Matthew before I hand over to Kevin.

Kevin: Let me point out that we are of course very pleased to see the domestic demand in the United States has improved by 5% versus Q4 last year.

Kevin: And reminding everybody that this is the strongest quarter.

Kevin: <unk> Q3 2022.

Kevin: In addition to that as you rightfully said I mean, the export sales continue to grow actually breaking records for the fourth consecutive quarter, which is not so much a surprise if youll see at the cost base and if youll see the differential between oil and gas. So these are very good.

Kevin: Dynamics that we see in the marketplace.

Kevin: Sure.

Kevin: <unk>.

Kevin: And for producers like ourselves with a very low cost basis.

Kimberly A. Foley: So, Peter, I think what I would add to that, and it's hidden throughout our messaging today, is that, you know, domestic demand, as you mentioned, is up, and export demand is up, too. You know, just to put numbers to your comment around year-on-year, year-on-year PE exports out of North America are up 27%. So, the new capacity that's now online is absolutely being exported around the world. Those channels to the market are open. We're involved in all of those, and we're very optimistic, now that we have our cracker back up in Corpus Christi, that we're going to be able to fill all those channels.

Kevin: In the Gulf.

Kevin: Kim.

Kimberly A. Foley: So Peter I think what I would add to that and it says hidden throughout our messaging today is domestic.

Peter Z. E. Vanacker: Domestic demand as you mentioned is that export demand is up.

Speaker Change: Just to put numbers to your comment around year on year year on year <unk> exports out of North America are up 27%. So the new capacity that's now online.

Speaker Change: Absolutely being export it around the world those channels to market are open.

Speaker Change: We're involved in all of those that we're very optimistic now that we have our cracker backup in Corpus Christi that we're going to be able to fulfill all those channels. So yes.

Kimberly A. Foley: So, yes, as you think about it, you know, we've got a high oil-to-gas ratio. We've got low energy. The U.S. is set with a very competitive advantage to meet the demands of the world. And there are a couple of points that I also want to outline.

Speaker Change: Do you think about it.

Speaker Change: Got a high oil to gas ratio does that low energy.

Speaker Change: S is set with a very competitive advantage to meet the demands of the world.

Speaker Change: And a couple of points. So they also want to outline here. If you look at days on hand in P/e.

Peter Z. E. Vanacker: And a couple of points that I also want to outline here. If you look at days on hand in PE, it went down from Q4 to Q1, I mean from 42 to 40. And so.

Speaker Change: It went down from Q4 to Q1 from 42 to <unk> 40.

Speaker Change: So.

Peter Z. E. Vanacker: You see there as well, domestic demand going up, export sales, the topics I mean, also that Kim highlighted. So we saw also that the capacity utilization industry, despite I mean that we saw a lot of additional capacity being brought online, and we believe that most of that capacity is now producing, maybe a couple of exceptions there with some technical issues, but there is not a lot of major capacity in the United States that still needs to come online. So we saw capacity utilization actually moving up to around 90% in PE in the United States.

Speaker Change: You'll see there as well.

Speaker Change: Domestic demand going up export sales to topics that mean also that Kevin highlighted.

Speaker Change: So we saw also that the capacity utilization industry. Despite that we saw a lot of additional capacity.

Speaker Change: Being brought online and we believe that most of that capacity is now producing maybe a couple of examples exemptions there with some technical issues, but there is not a lot of major capacities in the United States that still need to come online. So.

Speaker Change: So we saw capacity utilization actually moving up to around 90% in PD in the United States.

Speaker Change: Thank you. Our next question comes from the line of Jeff Zekauskas with Jpmorgan. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Jeff Zekauskas with J.P. Morgan. Please proceed with your question.

Peter Z. E. Vanacker: Thanks very much. I have a two-part question: is the real break on polyethylene prices overcapacity the overcapacity situation in China, and do you think that is what the market needs? It is either a tighter supply and demand balance in China or something moving Chinese prices up in order for prices to really be affected positively in the other jurisdiction. The second part is on slide 11, under the Our Act. In talking about olefins and polyolefins America, you say, balancing domestic demand with disciplined capacity to, What does that exactly mean?

Jeffrey John Zekauskas: Thanks, very much of a two part question.

Jeffrey John Zekauskas: Is the real break on.

Jeffrey John Zekauskas: Polyethylene prices overcapacity overcapacity situation in China, and do you think that what the market needs is either a tighter supply demand balance in China, or something moving China prices up in order for prices to really be affected positively.

Jeffrey John Zekauskas: And the other jurisdiction.

Jeffrey John Zekauskas: The second part is on slide 11.

Jeffrey John Zekauskas: Under the our actions and talking about olefin and polyolefin spherical you say.

Jeffrey John Zekauskas: <unk> Singh domestic demand with disciplined capacity utilization.

Speaker Change: What does that exactly mean.

Speaker Change: Let me go to your first question Josh.

Peter Z. E. Vanacker: Let me go, I mean, to your first question, Josh. Indeed, as you rightfully pointed out, even if we have seen a little bit of an uptick in demand in China, I would make a case that everybody is bleeding, or not where they need to be, NAFTA is expensive, and then the question is, How long will that last? Because There may be newer facilities, of course, that can hold on longer, but there are also quite a lot of sub-scale capacities in China, and I'm sure after how much? 12, 18 months of bleeding? Even 24 months of bleeding?

Speaker Change: Indeed, as you rightfully pointed out even though we have seen.

Speaker Change: A little bit of an uptick in demand in China.

Speaker Change:

Speaker Change: I would make.

Speaker Change: Make the case that everybody is bleeding.

Speaker Change: Margins.

Speaker Change: Or not where they need to be.

Speaker Change: NAFTA is expensive and then the question is.

Speaker Change: How long will that last because.

Speaker Change: There may be newer facilities of quarters that can hold on longer.

Speaker Change: But there is also quite a lot of subscale capacities in China and I am sure. After how much 12 to 18 months of bleeding.

Speaker Change: Even 24 months of bleeding.

Peter Z. E. Vanacker: How long will that then last until we see some actions being undertaken? But nevertheless, despite the fact, I mean, that China's supply and demand is not where it should be. You see these exports from the United States to other parts of the world. [inaudible] So the material finds its way then into other markets, markets where maybe also older facilities, not backward integrated, not flexible, fully dependent on NAFTA. These are the facilities, of course, that have it very difficult to be competitive.

Speaker Change: How long will that last until we will see some actions.

Speaker Change: Being undertaken.

Speaker Change: But nevertheless.

Speaker Change: Despite the fact that China supply and demand.

Is not where it should be.

<unk> Cds exports.

Speaker Change: From the United States into other parts of the World.

Speaker Change: Reaching breaking records.

Speaker Change: So the material finds its way into other markets markets, where maybe also again older facilities note backward integrated.

Speaker Change: Flexible fully dependent on NAFTA DS.

Speaker Change: These are the facilities of course.

There have been very difficult to be competitive.

Peter Z. E. Vanacker: As a consequence, we continue to believe. You've seen, I mean, the price increases at the beginning of the year. You saw two rounds of price increases in the United States last year, at the end of last year. We have these price increases out in the markets for April and May, and there's a very strong case, if you look at everything that is happening for those price increases I mean to stick. If I turn to Kim on the second question, the second question.

Speaker Change: As a consequence, we continue to belief you.

Speaker Change: You've seen the price increases at the beginning of the year you saw the two rounds of price increases in the United States last year.

Speaker Change: At the end of last year.

Speaker Change: We have to use price increases out in the markets where April and May.

Speaker Change: And there's a very strong case, if you look at everything that is happening.

Speaker Change: Those price increases I mean to stick.

Speaker Change: If I turn to Kim on the second question.

Kimberly A. Foley: The second question, I think the easiest way to explain that is it's an optimization. You're going to look at what margin you have on your domestic demand, you're going to look at your incremental cost of production to export, and you're going to make the right optimization across our assets.

Kimberly A. Foley: Second question I think the easiest way to explain that is it is an optimization youre going to look at what margin you have on your domestic demand youre going to look at your incremental cost of production to export and youre going to make the right optimization across our assets.

Operator: Thank you. Our next question comes from the line of Josh Spector with UBS. Please proceed with your question.

Thank you. Our next question comes from the line of Josh Spector with UBS. Please proceed with your questions.

Joshua David Spector: Yes, hi, good morning.

Peter Z. E. Vanacker: Yeah, hi, good morning. I wanted to ask about the cost side of the equation. So I mean, you continue to make good progress on your value enhancement plan. But at the same time, you know, you're investing to stand up a new business, and CLCS, I think, correct me if I'm wrong, that's probably a big driver of why your SG&A continues to increase by about 100 million over the last couple of years

Joshua David Spector: I wanted to ask on the cost side of the equation. So I mean, you continue to make good progress on our value enhancement plan, but at the same time you are investing a stand up new business and see Lcs I think correct me if I'm wrong, that's probably a big driver about why your SG&A continues to increase up about $100 million over the last couple of years.

Peter Z. E. Vanacker: So I wonder if you could kind of break the pieces apart in terms of the benefit from VEP, you see yourself getting the costs that you're adding for that new business, maybe over the next couple of years that don't have the EBITDA to match that at this point, and maybe inflation. So we can maybe do a better model over 2425. What the actual drop through is the savings versus costs versus new businesses. Thank you.

Joshua David Spector: I'm wondering if you could kind of break the pieces apart in terms of the benefit from the EP you see yourself getting the costs that you are adding that new business maybe over the next couple of years that don't have the EBITDA to match that at this point.

Joshua David Spector: And maybe inflation. So we can maybe better model over 'twenty four 'twenty five what the actual drop through is as the savings versus cost versus new businesses. Thank you.

Peter Z. E. Vanacker: Let me go first and then I will hand over to Michael. Of course, I mean, we continue to be very pleased with our VEP program, the acceptance in the organization, the value that we were able to create last year and that we continue to see being created this year. We're very well on track, as I said, to reach or exceed our targets for this year. I'll give you an example. Last year, for example, mid-cycle margin value creation at the end of the year was slightly above 400 million.

Speaker Change: Let me go first and then I'll hand over to Michael.

Michael: Of course, I mean, we continue to very pleased with our PDP program. The acceptance in the organization the value that we have been able to create last year and that we continue to see being created here, we're very well on track assets.

Michael: To reach or exceed our targets on the VEB for this year.

Michael: I'll give you. An example, I mean, because last year mid cycle margin value creation at the end of the year was slightly above $400 million.

Peter Z. E. Vanacker: The bottom line, with effective margins and effective products being sold for the year, was around 300 million. Well, a part of that 300 million, that's how the three pillars work, has been reinvested in building up the second pillar. And that is the business unit for circular and low carbon solutions; not the complete amounts we have invested, but a substantial amount of that 300 million has been reinvested to build up that pillar and, as such, also more platforms.

Michael: Bottom line.

Michael: With effective margins and effective product is being sold for the year was around $300 million.

Michael: Well, a part of that $300 million, that's how the three pillars work have been reinvested in building up the second pillar.

Michael: And that is the business unit circular in low carbon solutions not the complete amount we have invested a substantial.

Michael: Central amount of that $300 million has been reinvested to buildup that pillar and as such Biosimilar for that of course also lease.

Peter Z. E. Vanacker: That, of course, also leads. Now, remember, we have bought out joint venture partners, and we have done a number of bolt-on acquisitions. So, of course, with that, of course, you get higher SG&A on your balance sheet. But all that is where it works together, I mean, the pillars in our strategy.

Michael: Remember, we have joint venture partners, we have done a number of bolt on acquisitions. So of course with that of course, you get higher SG&A.

Michael: On your balance sheet.

Michael: But all of that is where it works together I mean, the pillars in our strategy.

Yeah, Josh maybe maybe just a few more comments in regards to cost.

Michael C. McMurray: Yeah, Josh, and maybe just a few more comments in regards to cost. You know, I think we have a pretty good reputation for operating lean, which we think actually gives us an advantage versus others. When times are good, we actually continue to be disciplined.

Josh: We have a pretty good reputation for operating lean, which we think actually gives us an advantage versus others.

Josh: Times are good we actually continue to be disciplined.

Michael C. McMurray: Quite frankly, in 2023, I think underlying cost control was strong. SG&A is a percent of sales, and sales totaled 3.8% despite revenue and cost headwinds.

Josh: Quite frankly in 2023, I think underlying cost control was strong.

Josh: SG&A as a percent of sale sales totaled three 8% despite revenue and cost headwinds.

Michael C. McMurray: We also made investments in our footprint when we started up POTBA for circularity, as you noted, and VEP, and some capability building across the enterprise. And clearly, inflation was a significant headwind last year. And as we've moved into 2024, we continue to make some targeted investments, for example, in our CLCS business and our VEP program, where we will invest about $270 million this year, a fourth of that is OPEX. Three-quarters of that is CAPEX.

Josh: We also made investments in our footprint when we started up TBA and circularity as you noted and Bep and some capability building across the enterprise.

Josh: Clearly inflation was a significant headwind last year and as we've moved into 2024, we continue to make some targeted investments for example, in our <unk> business and our Bep program.

Josh: Where we will invest about $270 million this year.

Josh: <unk> of that is opex three quarters of that is is capex.

Michael C. McMurray: But again, we're managing well and driving actions this year, both in CAPEX and in OPEX. And so I'd say overall, cost control is strong, and we are making targeted investments. And you can continue to expect us to manage costs well going forward. And our portfolio management, of course, helps with that. I mean, as you know, we're almost, I mean, at the point of closing the divestiture of ethylene oxide and derivatives, and we're almost close to closing our NETPEC joint venture, and that triggers, and, of course, also soon after that, the final investment decision to expand with an additional line with newer technology. So these things all work together is what I wanted to highlight. Thank you. Our next question comes from the line of Hassan Ahmed with Alembic Global. Please proceed with your question. Morning, Peter.

Josh: But again, we're managing well.

Josh: And driving actions this year both in Capex.

Josh: And in Opex.

Josh: And so I'd say overall.

Josh: Cost control is strong and we are making making targeted investments and you can continue to expect us to manage cost well going forward and our portfolio management of course helps us lift outs I mean as you know.

Josh: I mean at the point of closing.

Josh: Diversity charter hall facility oxide and derivatives and we're almost close that close at closing or netback joint venture and that triggers then of course also soon after that.

Josh: And a final investment decision to expense.

Josh: With an additional line with newer technology. So these things all work together is what I wanted to highlight.

Speaker Change: Thank you. Our next question comes from the line.

Speaker Change: Ahmed with Alembic Global. Please proceed with your question.

Ahmed: Good morning, Peter.

Operator: Thank you. Our next question comes from the line of Hassan Ahmed with Alembic Global. Please proceed with your question.

Ahmed: Peter You, obviously mentioned a couple of.

Ahmed: The joint Ventures, and you recently did obviously did not sort of venture out in Saudi Arabia, as well would love to hear your latest and greatest thoughts about where you guys stand in terms of potentially maybe consolidating the <unk> joint venture.

Peter: Thank you Hassan good question.

Peter Z. E. Vanacker: Thank you, Hassan. That's a good question.

Peter Z. E. Vanacker: As you alluded to, I mean, in Saudi Arabia, we have lots of activities ongoing, not just with the existing joint ventures but, of course, also with the next joint venture and then the next step with investments. We are happy, and actually, that deal was done before my time. So I'm even super happy with the fact that we have entered into that joint venture with Sasol. I would say, generally speaking, the operation is running well in that joint venture.

Hassan: As you alluded to I mean in Saudi Arabia.

Hassan: We have lots of activities ongoing.

Hassan: Just with the existing joint ventures, but then of course also with the <unk> joint.

Joining venture and then the next step with <unk> investments.

Hassan: We are happy and actually that deal was done before my time, so and even Super happy.

Hassan: With the fact that we have.

Hassan: And that joint venture with with Sasol.

Hassan: I would say generally spoken operation is running well in that joint venture.

Peter Z. E. Vanacker: We're pleased, I mean, with our position that we have in there. And, of course, we continue, as we have said multiple times, to always look at opportunities in the marketplace where we can grow and upgrade the core. So, we are not focusing now on just one thing, but we are continuing to look at growing and upgrading the core. Having said that, we have repeatedly stated that we will be extremely disciplined in our M&A activities. Michael? Yeah, and maybe, Hassan, I'd...

Hassan: We're pleased with our position that we have in there.

Hassan: And of course, we continue as we have said multiple times to always look at opportunities in the marketplace, where we can grow and upgrade to core.

Hassan: So we're not focusing now on just one thing, but we are continuing to look at growing and upgrading the quarter, having said that we have multiple times outlined that we will be extremely disciplined in our M&A activities, Michael and maybe Hudson I'd say a couple a couple more.

Peter Z. E. Vanacker: And maybe, Hassan, I'd say a couple more things. I think clearly, just looking back on the last two years, we've been much more active from a portfolio management perspective, both on bringing things in, but also jettisoning things where there are better owners. But I don't think it's appropriate for us to comment on a specific transaction.

Hassan: Things I think clearly just looking back upon the last two years, we've been much more active from a portfolio management perspective, both on bringing things in but also jettison things that where there are better owners, but.

Speaker Change: But I don't think it's appropriate for us this comment on a specific transaction.

Michael C. McMurray: Thank you. Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Kevin Mccarthy with vertical Research partners. Please proceed with your question.

Operator: Thank you and good morning. Peter, last March or March 23, I should say, you unveiled some financial goals around your CLCS initiatives, half a billion in EBITDA by 2027 on route to a billion in 2030. I was wondering if you could speak to your level of confidence in the march toward the first piece of that in 2027. And part of the reason I ask is that it sounds like you may not take a final investment decision on more tech in Houston until next year.

Kevin William McCarthy: Yes, Thank you and good morning Pete.

Kevin William McCarthy: Peter last March in March 'twenty, three I should say you you unveiled some financial goals around your CLC us initiatives half a billion in EBITDA by 2027 on round two 1 billion in 2030 I was wondering if you could speak to your level of confidence in the March toward the first piece of that.

Kevin William McCarthy: In 2027, and part of the reason I ask is it.

Kevin William McCarthy: It sounds like you may not take a final investment decision on more check in Houston until next year.

Operator: I'm not sure exactly how long that might take to build out, but maybe you could kind of speak to the timing and ramp of tonnage extending what you show on slide six. How does that 123 kilotons maybe ramp up over the next two or three years toward your medium and long-term goals?

Kevin William McCarthy: I'm not sure exactly how long that might take to build out but.

Kevin William McCarthy: But maybe you could kind of speak to the timing and ramp of tonnage.

Extending on what you show on slide six how does that 123 kilo tons, maybe ramp over the next two or three years toward your medium and long term goals.

Peter Z. E. Vanacker: Thank you, Kevin, for your very good question. Generally speaking, we continue to be very confident that we can reach what we set a bit more than one year ago for CNLCS, but also on the overall targets that we had put out there, with a billion for CNLCS 2027 and additional profitability. We are making very good progress. I mean, with the entire family, you saw that one particular slide. The slides, I mean, doubling the volumes, very good margins that we are generating for the entire family.

Speaker Change: Yes. Thank you Kevin for your very good question.

Speaker Change: Generally spoken we continue to be very confident.

Speaker Change: That we can reach what we have set.

Speaker Change: A bit more than one year ago.

Speaker Change: <unk> Lcs, but also on the overall targets that we had put out there.

Speaker Change: As a $1 billion on sea and Lcs.

Speaker Change: <unk> thousand 27.

Speaker Change: And additional profits.

Speaker Change: Profitability.

Speaker Change: We are making very good progress with the entire family you saw that one particular slot the slides I mean doubling the volumes.

Speaker Change: Good margins that we are.

Speaker Change: Generating for the entire family.

Peter Z. E. Vanacker: We, as you know, Kevin, some of the parts go faster than other parts, so it's clear that the renew, circle, and renew family goes faster because we have been in the market for a couple of years with bio-waste-based polyolefins.

Speaker Change: We as you know Kevin some of the parts go faster then.

Speaker Change: Then other parts so it's clear that the renew circular and renew family.

Speaker Change: It goes faster.

Speaker Change: Because we have been in the market since a couple of years.

Speaker Change: The Biowaste based polyolefin.

Peter Z. E. Vanacker: The network that we have built up and continues to build up. On the mechanical recycles, remember all the deals, and it's also on the slide that we did in Europe and then also starting in the United States are ramping up very fast as we had planned. [inaudible] The advanced recycling parts, yes, of course. We have the first investment decision taken for the capacity in the Cologne hub. It's on track. Work is under way, it's underway. The team is on the ground.

Speaker Change: The network that we have buildup and continue to build up.

Speaker Change: On the mechanical recycles.

Speaker Change: Remember older deals and it's also on the slides that we did in Europe, and then also <unk>.

Speaker Change: Starting in the United States.

Is ramping up.

Speaker Change: Very fast as we as we had planned.

And.

Speaker Change: The advance recycling parts. He is of course, we have the first investment decision.

Speaker Change: Taken for the capacity in the colon up.

Speaker Change: It's on track.

Speaker Change: Work is on the go is underway.

Speaker Change: The team is on the ground.

Speaker Change: We look positively on the timeline that we have there I mean to reach what we had set starting up.

Peter Z. E. Vanacker: We look positively on the timeline that we have there. I mean, to reach what we had said about starting up by the end of 2025. And we are now looking at, of course. The concepts, as we have alluded to and are in the slide, to double that capacity, bring it, I mean, to Houston, on the refinery side. Do the necessary work on the upgrading, looking at that from a technical point of view by leveraging our hydrotreaters that we have in the refining. So that one, I would say you're right.

Speaker Change: By the end of 2025.

Speaker Change: And we are now looking at of course.

Speaker Change: The concept as we have alluded to and as in the slides to double that capacity bring it into Houston.

Speaker Change: At the refinery sites.

Speaker Change: Do the necessary work on the upgrading looking at that from a technical point of view by leveraging upon our hydro treaters that we have in our refining.

Speaker Change: So with that one.

Speaker Change: I'd say youre right I mean final investment decision not this year, but next year and then take starting to build.

Peter Z. E. Vanacker: I mean, a final investment decision, not this year, but next year, and then it takes time to build. But in the meantime, what we are also doing is we're working up as we remember, we always said we would be technology agnostic. So we work together with different partners on the advanced recycling side, so as an offtaker of plastic oil that we can either upgrade or move directly into our steam crackers. So, from that perspective, it gives us the possibility to continue to grow with advanced recycling polyolefins in the marketplace. So, I have no indications that we will not be able to reach our targets; we continue to be very confident. Thank you. Ladies and gentlemen, this is our final question this morning.

Speaker Change: But in the meantime, what we're also doing is we're working up as remember we always said, we will be technology agnostic.

Speaker Change: We worked together with different partners on the advance recycling sites. So as an off taker of plastic oil that we can either upgrades or moved directly into our steam crackers.

Speaker Change: So from that perspective, it gives us the possibility to continue to grow.

Speaker Change: With defense recycling.

Speaker Change: Polyolefin.

Speaker Change: Market based so I have no indications.

Speaker Change: We would not be able to reach our targets.

Speaker Change: We continue to be very confidence.

Speaker Change: Thank you ladies and gentlemen, our final question. This morning comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Vincent Stephen Andrews: Thanks, and good morning, everyone.

Vincent Stephen Andrews: Can I just ask on the on the cash flow going forward or are we done with the working capital builds are probably a little bit more of that to come.

Operator: Thank you. Thank you.

Michael C. McMurray: Hey Vincent, it's Michael. Yeah, well, I'd probably answer the question in two ways. I think for the second quarter, it should be relatively stable, but I hope things actually get better in the second half when we consume a bit. But that said, I don't expect us to consume anything that's material.

Vincent Stephen Andrews: Second quarter.

Michael: Hey, Vincent it's Michael.

Michael: Yes, well I'd.

Probably answer the question in two ways I think for the second quarter it should be relatively stable.

Michael: But I hope things actually get better in the second half when we consume consume a bit.

Michael: That said.

Michael: I don't expect us.

Michael: To consume anything thats material.

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

Peter Z. E. Vanacker: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Vanacker for any final comments.

Peter Z. E. Vanacker: Thank you everybody, very good questions, but of course, I was missing a few questions around our propylene oxide business, our oxy-fuels business, and our APS business, and let me highlight that the team is doing fantastic work in all of these businesses. We're making very good progress, and we're moving, I mean, to driving season, which, as you know, is always good for oxy fuels, from an oxy fuels point of view.

Speaker Change: Yes. Thank you everybody very good questions, but of course, I was missing a little bit questions around that.

<unk>: Over corporate and oxide business, our oxy fuels business in our ACS business now let me highlight that the team is doing a fantastic work.

<unk>: In.

Speaker Change: All of these businesses.

Speaker Change: We're making very good progress and we're moving them into driving season, which as you know is always good for an oxy fuels I mean from an oxy fuels point of view.

Peter Z. E. Vanacker: We continue to see early indications that durable goods demand is going up, which is, of course, also good for our leadership position that we have in low cost and low carbon footprint propylene oxides. And I'm also very pleased, as I said in the prepared remarks, by seeing how we are on track in the transformation of our APS business, or Winn-Wraith, or service level. These are things that we're looking at, and Torkel and his team are making fantastic progress.

Speaker Change: We continue to see early indications that durable goods demand. This is.

Speaker Change: Is going up which is of course also good for our leadership position that we have in low cost and low carbon footprint propylene oxide and.

Speaker Change: And I'm also very pleased as I said in the prepared remarks.

Speaker Change: Seeing how we are on track in the transformation of our Aps business.

Speaker Change: Our win rates.

Speaker Change: Our service level.

Speaker Change: These are things that we're looking at and Toric lens has team are making fantastic progress.

Peter Z. E. Vanacker: And so also very pleased with that, despite, of course, certain markets on a global basis, especially durable goods, not being at the top level yet. So it is very promising when those markets also continue back to sustainable growth.

Speaker Change: So also very pleased with that.

Speaker Change: Despite of course certain markets on a global basis, especially in durable goods.

Speaker Change: Being at the top level, yet so it is fairly promising when those markets and also continue back to sustainable growth.

Peter Z. E. Vanacker: So, thank you all for the thoughtful questions. And, of course, we look forward to sharing updates over the coming months as we continue to make progress on our long-term strategy. We hope you all have a great weekend. Stay well and stay safe. Thank you.

Speaker Change: So thank you all for the thoughtful questions and of course, we look forward to sharing updates over the coming months as we continue to make progress on our long term strategy.

Speaker Change: Hope you all have a great weekend stay well and stay safe. Thank you.

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

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

Q1 2024 LyondellBasell Industries N.V. Earnings Call

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