LYB - Earnings call transcript Q3 2019 | LyondellBasell Industries N.V.

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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. [Operator Instructions]

I'd now like to turn the conference over to Mr. Investor of Director Kinney, Relations. David begin. Sir, you may

David Kinney

Chief the Thank XXXX quarter our Executive Aebischer, to by you, Hello, and Chief our Thomas and Britney. LyondellBasell Officer; Officer. teleconference. Patel, third Bob welcome Financial I'm today joined

assumptions useful risk and the results would some our Today Before to differ out forward-looking and the financial to statements discussing we non-GAAP the today's and will statements www.lyondellbasell.com/investorrelations. alternative our factors that discussion, learn and our forward-looking significant encourage actual statements on business results accompanies point is presentation be regulatory in which like filings, available reasonable believe We we while the slide the website We lead business to to the available you begin measures based to investors. call are are cautionary at the presentation could statements reviewing making uncertainty. I references to a at by slides measures. more are our are www.lyondellbasell.com. and forward-looking subject about Nonetheless, that upon

GAAP non-GAAP available measures measures website. on to also including financial release of Reconciliations disclosures our together with currently the earnings financial other are

United point in will the a today United States beginning XXX-XXX-XXXX out The like of XXX-XXX-XXXX this p.m. for recording States. Eastern the call passcode is XX:XX until XXXX. would I X:XX p.m. Finally, X December be calling by to telephone by both time available that at Eastern time numbers outside on and

growth results, and an our outlook call, we provide the third will our current on today's focus environment, quarter During on update near-term initiatives.

over now like to said, I Bob. turn to that would the being call With

Bob Patel

joining you to all participating you and the earnings call. Thanks, quarter thank third around Dave. Good our world of day for

X slide and quarter with begin review third highlights. the Let's

this The and commitment how a on conditions. emphasized advantaged of range During quarter third with deliver performance market of during of resilient poised leading $X.X cash we and Investor Day in activities. company cash portfolio operating strong flows businesses billion September, is our delivered to our the across from

represents relative of of year. EBITDA to second quarter X% the decline a quarter $X.X approximately third the Our billion and XX% prior relative to

Third which increasing quarter. per represents over third share, is previous consecutive improvement earnings the This $X.XX of our share. quarter earnings a quarter were per X%

The natural liquid benefit our second sales American volume stocks the in advantage products continue typical our quarter. feed seasonal of and Demand polyethylene abundant X% our strength consumer-driven a low-cost gas to for with to reflected North businesses. global non-durable increase relative polypropylene

trade market saw efficiently driven durable for conditions, to Despite the and quarter businesses well continued due performed Industrial markets our challenging flow. outstanding products cash portfolio demand uncertainty. the deliver of to weaker margins during

slide maximizing X generation. review the our from this turn and Let's returns cash approach to to

a value-driven strong followed a returns. and and consistent allocation that have growth balance strategy provides disciplined We between sustainable capital shareholder

underway capacity growth Our Hyperzone our with speak. commissioned polyethylene in new investments capacity we being are as

our differentiated expect XXXX This Cost be to our now advantaged volumes in will quarter and approximately to feedstock during the profitability ramp for deliver up sales technology, project project estimated first to $XXX We very products attractive year. America the with at is million. North which to new increasing continues throughout position customers. high-performing the the due of

Houston, plant many propylene Day, being of in new of of sites toured that the two our you outside and Investor across Channelview recent our construction oxide built During is Bayport.

progress plant value-driven XXXX on The and this half XXXX. second increase illustrates will completed additional our the right the be cash box our of We continue generation opportunities. of in slide further to the during expect on

propylene LyondellBasell propylene XXXX. to oxide. will contract cost-based capacity long-term growth our we dehydrogenation This support September, extended late In supply provides propane additional with downstream with economics Enterprise their that start the as relationship anchor in our second for customer in plant at

in Liaoning form polyolefins Bora with provides Earlier olefins LyondellBasell a will of project in expand presence is venture more expected network XXXX. in that more GDP. and production joint and that The to XX% begin local complete than September, the we Group global operations a rapidly project growing global China. announced to the market with This at is understanding rate than of memorandum in our a twice

These Finally, offer and resulted a returns substantial our our outstanding tender completed shareholders. that for the in repurchase $X.X discipline approximately our growth shares balancing with X.X% to commitment we July of in of demonstrate to billion. actions

discuss our and Let's turn to safety slide X results.

day behaviors operating our taken safety granted. and for business communities in embedded our safely that our leading is to performance It We is for our to every culture. Our on and that partners. never processes support emphasis cultivate contractors, need work realize we employees,

we We consistent as believe do. underpins focus it a will maintain we that continue safety, everything on to

Let's turn where in X we to highlight advancing our activities agenda. sustainability slide LyondellBasell's

over week the published report During This prior on report. second our the Investor same as progress is and in year. September, goals website Day sustainability we annual and it our our describes our

advance business also circular that company the developing models is Our innovative economy.

the PP our molecular In addition feedstocks for month to new our mechanical technology. recycling plastics, to and we business and a of facility last of pilot usage construction announced new MoReTec recycling produce Italy bio-based PE in

so next forward are circularity remember that many the and decade. provide benefits It's and will platforms profitable these to business society business moving develop do within to We future. with increase in three plastics important continue and models sustainable to the to

issue of must we plastic the waste. address However,

plastic leading We the environment Alliance of the from have eliminate pursue our leakage into End facilities to committed zero to the to meaningful and Plastic solutions through plastic are production we loss Waste. pallets of

our XXXX. with your stakeholders emission and take Additionally, and We targeting investors time is to progress. will provide us our hope sustainability feedback on you company that in dioxide report review a our by reduction XX% carbon our as intensity

third more will Thomas provide now, And on our for the highlights detail financial quarter.

Thomas Aebischer

day Thank slide you, over X past see Bob, the of of growth all the our and to you three you. turn good where Please can to earnings quarters.

seasonal demand strong our for as share our driven earnings third well mentioned, consumer repurchases. share quarter supported per Bob were as As of $X.XX products by sizable

to the net $XX positions from year million acquisition benefit quarter the the Schulman an by per Third or settlement $XX non-cash income share. quarter share. during tax prior costs increased of per impacted results related Integration that $X.XX by $X.XX earnings third included million

During the repurchased million quarter, we third shares. XX

more consistent our let's flow at on and closely X. cash efficient Now performance slide look

flow to months. capital billion over years generated businesses from activities the billion of was $X cash the free billion over calendar $X.X Our over expenditures, $X past $X operating billion four XX XX and operating have for XX.X% each required the of trailing prior our months. cash yield sustaining With

our effectively third cash net flow Debt describes quarter. Cash starting our of active finance during very for a $X.X the billion. our by X billion, quarter Slide during balance flow department. and generation $X.X increased operating activities doubled deployment third from

recall debt timing the that the tender While increase of in we of with invested billion on offer, $X.X approximately acquiring A. year. hand you our will cash July Schulman aligns last

tranches to the During issued the rates in company's the X.XXX% Eurobonds, the loan two in lowest a history, in and terms third seven- The proceeds of XX-year used for billion and $X coupon notes and debt. respectively. term a portion repay for our were we quarter, and our short-term X.XXX%

the in these this rate billion priced for of notes, these is lowest history to Near used of also in repay in held tenure. bonds that's we dollar September, U.S. The coupon company for October. debt. We XX-year proceeds $X X.X% the notes end short-term

to paid before, of invested to and the million allocated in growth for capital. the Capital billion were repurchased sustaining XX% quarter dividend, returning approximately $XXX projects, roughly shares as XX mentioned During the we with profit remainder total generating a $X.X quarter, addition, expenditure shareholders. third third in with million

year, increased second has construction Houston. for growth of Hyperzone the expect in in over PE investment Our trend And our plant quarter. a our PO/TBA accelerate plant activity we and as complete similar the new the remainder we in on

of closed weighted XX the our maturities The bond reduced after Slide approximately billion $X.X average cost recent of the debt, and October basis cash liquid investments. of XX, offerings with our two The long-term points. issuance. debt, by quarter illustrates

We well euro in company both, a and maturity a that risks benefit from markets. consistent to enables U.S. income have profile fixed presence and the reduces refinancing, balanced

our to in approach Day. detail during slide we our Let's and turn discussed deployment XX capital to disciplined review Investor that

our principal The capital have for remained consistent. allocation strategy

generate businesses flows. cash Our tremendous

progressive first are a dividend. foremost to We strong and and committed

our our capital expand We will footprint. make And reliability. investments manufacturing that sustain asset

value-minded inorganic to repurchases. cash the surplus And pursue share opportunities. will We return growth

by of All by commitment, the provided our flexibility credit to underpinned investment-grade strong ratings. points our are decisions these

to, With that, call Thank thank you. you back very Bob. the much. And will I turn

Bob Patel

Thank Thomas. you,

past many As want from I Thomas will know, build four be take organization. to thank the the Thomas retiring of to coming the hard you to and our finance years over company work weeks. opportunity for his this enhance in

wanted Chief growth Thomas to These several and leadership I the our best. to Michael will and thank successor to transition Vice our help manage Financial I family all the his Tuesday, Executive McMurray, thoughtful the and Thomas strategy, of X. in particularly wish processes, President November standardizing contributions of his development us a an company Officer agreeing for a our next join for as who

us for years join joins Corning Michael Owens will as that Royal after treasury Shell. than in me various Michael a in warmly I hope serving XX career roles, LyondellBasell. in for Corning, more investor Owens you and and spanned relations to CFO finance, welcoming Dutch all

review and to performance. quarter our slide turn EBITDA let's Now third XX

portfolio, business challenging the market third continued diverse a was strength $X.X and EBITDA footprint global resiliency environment. billion. demonstrate in Our quarter for to and

quarter. approximately $XXX benchmark production chain per respectively with, strong and polyethylene remains the industry in third both ton Americas integrated for the during Profitability, and of Europe margins $XXX

we a businesses, to Several the During processing quarter. margins the market. suffered refinery margins high demand benefited due second and well-supplied our to maintained crude intermediate Houston mainly of in styrene quarter, improved our at weak from rates industrial relative lackluster from chemicals

with segment Americas Let's Olefins begin slide our XX. and Polyolefins on

was benefits million, liquids, Third natural second EBITDA abundant and our our the by to Profitability feedstock through than higher optimization. robust capability million capture and $XXX gas global driven affordable the quarter demand $XX was of quarter.

higher results turnaround XX% second on operating to third sales expanded during Ethylene million Olefins rates Clinton, to the facility prices fell by to lower a $XXX that maintenance our costs. we quarter. planned Iowa quarter. ethylene feedstock increased due compared Margins at the completed and

value ethylene flexibility prices XX quarter. across high crackers. the XX% by the points nearly six in butane propane of We third increased utilization by quarter, captured our to feedstocks and XX% in fell and propane from percentage third the U.S. As of nearly fleet butane we feedstock

due to $XXX by due increased by about to third during per spread increase higher quarter, and prices. ethylene ton, declining $XXX polyethylene decreased million partly the price volumes over in Polyolefin ethylene costs declined an Polyethylene exports. polymer about results Polyolefin

customers fourth the new will as seasonal capacity seek in expect follow inventories. year-end and to trends, of With of this market, And opportune quarter reduced with U.S. now XX% new review typical the polyethylene polyethylene capacity demand an pricing. time take holiday the approximately downtime. is impact We minimize the to

green The bars represent Slide XX, increases, illustrates compared have the polyethylene the American of the quarterly changes volatility orange been contract relatively price over bars indicate and for four years. amplitude moderate price years. North XXXX past change, The prior when the and industry, decreases. during to XXXX five

reported price In fact, XXXX change over the three the zero. net been quarters first has of

export that Increasing production. indicate imply of XX% new in days in fell exports, statistics the responses, muted decreasing Industry sales September, meeting sales the that pricing global now all representing in demand capacity and of inventory, is with inventories market.

capacity the create Our in local new fluctuations will view particularly markets. is short-term that,

as However, balanced, is and providing producers ultimately markets such for relatively we good new LyondellBasell. the believe profitability will polyethylene capacity global needed advantaged remain

Now please our to Polyolefins and performance Europe, XX and review Asia, International of segment. the turn to slide Olefins

impacted quarter. was but by polyolefins third Underlying second $XX During lower EBITDA demand. $XXX a polyethylene by million million, chain quarter, were margins, supported the compared decrease business healthy results, the to

quarter, by volume decreased Polyethylene June. quarter. volume, $XX the to returning combined decline increased comparable a XX% results customers second a small of to million half pause second the the with to in over due results market, were taking after about the previous Olefins polyolefins during

ventures Polyethylene Modest decline income in million. reductions a approximately of joint margins $XX the in declined across offsetting in improvement equity margins to our volume. contributed

reductions fourth Americas We trend, expect quarter in to demand. the the the as year-end same seasonal follow with

Please turn to slide XX.

look segment. Let's take at our Derivatives and Intermediates a

to due for decrease was by to compared were a but seasonally Oxyfuels quarter. well-supplied bolstered million EBITDA our quarter prior a Results $XXX decline by in $XX affected a the business, margins, market profitability. Chemicals intermediate Third strong million,

Chemicals businesses, third in Intermediate at for the which compared fourth decreased quarter, We to in planned results the styrene. volumes maintenance driven both La million all by and Acetyls second began plant by quarter. decline our in quarter, will third a primarily Porte reduce the $XX margin

saw and we improved Related premium & million driven lower higher gasoline results Oxyfuels feedstock by Products nearly as $XX margin prices. butane blend increases

During gasoline margins October, declined oxyfuels summer have ends. the demand weaker driving with as season

from pressure declines and continued We expect supplied for typical market. fourth the quarter a segment well seasonal

to XX the slide results Solutions review turn please Polymer of segment. Now to our Advanced

the impacted EBITDA and prior quarter. partially million $X.XX Included modest continued for million in construction were of $XXX by third compared improvement by demand. by integration Third $XX the costs sector a quarter, to integration headwinds Results earnings was $XX in per quarter were results million, increased an in which costs decrease automotive the offset impacted share. the

unchanged Compounding relatively the results & Solutions in due were automotive $XX market. Polymers million. softness by increased to results the Advanced

was market. the performance quarter Third roofing supported demand improved from seasonal by

is continued team making on efforts. Our integration progress the

In we synergy fact, $XX a our total to increased $XXX million. target million two-year of cost by

At the at quarter, a million. run we of annual end third synergies rate $XXX of are cost the forward approximately capturing

general automotive for uncertainty and disruptions to seasonal our trends. expect segment industry to to following sentiment and likely the normal We profitability Trade for market. is follow that affect the business labor the continue continue

Turning to slide XX.

Refining second our by $X third for quarter. negative segment. improved to million for result over the discuss quarter million EBITDA the $XX the Let's

the crude day We nameplate the demonstrate the at program with XXX,XXX quarter. at to throughput of refinery reliability XX% benefits continue operating our barrels increasing of capacity Houston to per for

crude Our Houston of Canada Houston. quarter, the in purchased heavy string Mexico, stronger on The has our improved benefited sour and diesel other in crude heavy disruptions the refining heavy discounts third margins the of market by in from oil Refining refinery we global of processes the open sour locations. crude for been and refinery losses oil challenged a quarterly oils supply portion from in sour segment. spreads resulting market In U.S.

pursue in from crude pricing higher the was oils profitability crude to utilization have pricing These for supply impacted business. formula increases our of further decisions from us Mexico. by of unusual long-term increased September, the alternative spurred During refining

IMO XXXX continued fuel closer, of As results fourth improvement quarter. the in our we marine expect inches the the during regulation implementation refining margin

this high environmentally are take fuels. of more crude regulatory advantage oils friendly converting sulfur well marine We by to change into positioned

slide segment. Please XX review results the turn to we as technology our of

upon a quarter, million and The decrease sales. quarter. was EBITDA based the our business million, licensing polymer segment compared of the $XX third technology catalyst technologies the previous During of model production for to is $XX

we revenues of the projected during Individual activity milestones to contract third than timing terms fourth sales the the be in of licensing pace resulted quarter, had the In quarter, the prior reduced drives for business. project and strong quarter. the are fewer volumes EBITDA. licensing Catalyst which licensing milestones and

quarter's On slide results. XX, let me summarize this

$X.XX we quarter, the per During increased our to share. earnings

of strong profitability $X.X cash generated and Our operating billion. activities remained from

many the Our The lack uncertainty XX% delivering approximately capacity of performance us is company sector the in is upon has with a market cycle challenging demand long-awaited resilient where trade and our products. of now for industrial U.S. online. polyethylene confidence reduced of now in

trigger increase reverse any are should destocked over and naphtha spreads is lows. inventories markets Asia these trends improvement XX-year in industrial in largely approaching Polyethylene likely to With restocking confidence and that tighten margins.

sources In of that has sentiment. to tangible LyondellBasell market improvements, market cash of independent are growth addition the flow

fuel drove in marine higher differentials improved that and profitability business the diesel spreads October, for XXXX October. favorable regulation IMO During looming our of oil implementation the crude

and increase reduce and completion will provide next opportunistic cash repurchases. our new year of dividend capital we the the CapEx further spending, and secure for share higher capacity We polyethylene over plant. flow support additional our Hyperzone lower expect our earnings our to With with

positions In Enterprise. new leading a We and that support continue should pursuing our to a in sustainable supply propylene for objectives portfolio agreement to investments short, growth our in advance our leveraging with investors. deliver partnership China value by disciplined we're advantaged

now take questions. to pleased your We're

Operator

from comes Thank Barclays. from first Duffy question you. [Operator Instructions] Fischer Our

line open. is Your now

Duffy Fischer

guys. morning, Good Yeah.

Bhavesh Patel

morning. Good

Duffy Fischer

getting and of or space, number you more your in First through you you major XXXX. margins just the a too the it. polyethylene down if get have be question their do throughout they analyze coming data think of that they punitive would way Where all is on wrong? kind they're it Obviously, integrated negative kind would for polyethylene? outlook consultants the at are of look What than they

Bhavesh Patel

market and side, all, of we a of look prior you at on downturns, demand. first Duffy the the Well you impact environment consider that's if uncertainty demand already have if today lot

uncertainty, the long Brexit so fears, auto trade recession and about year sector, have demand destocking. and weighed on You we've those all on seen all think

of we might we've about And what somewhat already So seen missing. demand to think side, be a question on they the your downturn.

It's to to point I If And to $XXX of towards that's you last pointing me seems spread. per if XX the that you polyethylene that over -- would Asia margins. approaching period naptha lows years reaching time. ton. a PE that's And in trough over the look the it

Operator

from comes And Instructions] from question Partners. Research Vertical next Kevin McCarthy [Operator our

line open. Your now is

Kevin McCarthy

the questions Yes. Bob, couple on refinery. of a

that talk products it of October way you unit of that You you're terms in asset XXXX. did Can please? how mix referenced the in through slates the impact the run running Does catalyst influence your IMO expected event? and of

Bhavesh Patel

see the prior in IMO the will distillate meaning from October. able forms also comes demand diesel October. if all ran meet wider We're us. specifications. So of refineries conversations, light-heavy -- see a differential we'll you'll well unit not spreads as impact that our less that spreads. already and that in wider benefit seeing very should crudes for And to sour -- from is recall are One several that some We new from the

about reference, October some points September you average was X-X-X of the Maya give now $XX.XX. to So The $XX.XX. is

toward in differential. improvement significant X-X-X have the September we the to as of $X.XX light-heavy widening we go October. to year, next approximately improvement that We seen we've So Maya the leverage from into think that

also of work. recall of our all turnaround that refineries our you'll terms positioning, In completed we've

any we year, in have refinery. major not turnaround next activity our do So

that buy continue the to to that. we're we're we're at our most our on next competitive full run to focus rates prepared and to and oils crude refinery best suit doing So going year

XXX year volume per think barrels we well-positioned So, we I at think really that leverage we're million the about and process.

Thomas Aebischer

XX.

Bob Patel

XX.

barrels we year million XX process. Sorry per that

multiply So barrels. has every when by a XX impact dollar significant pretty year a over million it you the

Operator

Thank Deutsche comes next you. Bank. from Begleiter David question from And our

Your is line open.

David Begleiter

Thank you are remains Hyperzone. you. discuss Thank same? you. the And did you end cost Good is for your at morning. progressing? Bob, progress the Can seed how increase volumes? going Who How are EBITDA on you contribution the whether the just expected the -- to that project?

Bob Patel

Yeah.

So, cost David. schedule first, about and

recently. bills increase. compared So million CapEx very $XXX of yes, this We're have did that it occurred sort showing on to Still about number at cost, point. a competitive

Schedule-wise, In commissioning fact, late we the I or parts and very would early move say can year tell. into what various expect of production now plant, year. still market we're from than average better we in to next the

certainly early terms start differentiated of the very and have In by to year downs technology. the What's that the to you're back that produce. of demonstrate starts on new contribution, year, is technology will we the off ramp we envisioned this typical spec had the EBITDA prove to make up to types you that And we some and be producing many half ups that some while as ought can trying it'll next demonstrate make the of production the it. through products of out that of products plant

Operator

you. P.J. Thank question from Citi. from next And comes our Juvekar

now is line open. Your

P.J. Juvekar

morning, Yeah. Good Bob. Hi.

Bob Patel

morning. Good

P.J. Juvekar

up the your talk you butane feeds. slate Can mentioned You ramping bit a feedstock Gulf propane little Coast? about and on

competitors naphtha. your to of One went zero

propylene do evolving? can you your how you So, and with feedstock just deal slate Enterprise, see about more that go even lighter? Can with you talk your

Bob Patel

really feedstock decision. our so of more and consideration, convert first sense. needed because of driven It's impact economics. about we of the economic feedstock and propylene, propylene we also we unit the we made to produced the Perhaps than it in Well, have more all, propylene can amount has price P.J. relative output, flex ethylene more propylene amount we price the hasn't far where volume relative the if our of

being Y-grade butane perhaps to XX%. this we and our environment earlier, economical, think I feedstock mentioned propane on capitalize priced point with to curve. crack LPG I that of bit we available a U.S. We range and well stress have supplied cracking to of to becomes the if key could flexibility a whatever well that still really full feedstock I feedstock see the cost presents think and ability little And the Y-grade, more maintain us And ethane global much is As the advantage up itself. increased as think that on we more. you when to about

Operator

question Thank next you. from from our Sachs. And comes Koort Bob Goldman

now open. is line Your

Bob Koort

about pretty about as Bob, bit to in Thank good inorganic wanted cyclical about also And think cadence just But own little allocation, valuations tension some guess short-term in least levels integration you in these and that names particular valuation at the between versus and and talk forward. frankly. Thanks. I and the as what how well to looks in you. LyondellBasell M&A, potential value? maybe the could targets. since your we've long-term you summer, maybe a can talk then, reinvestment the like just you a going I fluctuations Schulman costs of rally capital seen speak

Bob Patel

So, that the sheet. on rating all we Bob are important consider post we few to One our that to BBB the of might any and transaction in strong have very committed a is terms grade M&A, very is flexibility investment to. to rating minimum hold through a really principles cycle, that strength us balance first of the we're there

have value-oriented, and and demonstrated think we've decisions patient fit through and going what we And haven't be things very have our on to all I done. must what disciplined. we're Secondly, we strategic those done of

the between we of secure Investor our about To for at And as your and to first perhaps Day, really demonstrated progressive we're way is dividend the and time. ourselves acquiring committed well about strong use this point that it's covered. and flow, operating acquiring foremost, over tension think others, cash the the

we'll have progress think we buybacks to cash XX organic to Sustaining so be CapEx excess by months. as $X.X the over dedicate will declining, XX next billion, opportunistic growth flow we to

balance sheet, for that we more buybacks. that of use likely would would We as consider As far for not our very M&A. value using oriented

strong stay disciplined, core investment close constantly solve grade to us look for to So a stay our for rating. and

you integration and XXXX. the further, know Schulman through will much on comment will if costs flow integration, Thomas, about to wanted I ramp question how don't your up And

Thomas Aebischer

Right.

So we Bob. thank -- you,

for quarter where are made seen So integration we $XX of off -- third costs progress the we million, in further you tax Schulman so $XX integration have we at the the the accelerating million. now

-- LyondellBasell first at we are into of a of so and the Schulman will actually with peak. integration in go where And we integration will the half the part large XXXX of live that's SAP costs

Operator

question you. And next Thank from our Andrews Morgan Vincent from comes Stanley.

Your now line open. is

Vincent Andrews

Bob, you. now change for is, Thank refinery, it? and is the on in I another LyondellBasell its and the question obviously opportunity my to monetizing improved How just you've margins question as guess earnings structural the And power. would consider reliability of there's core or refinery it. you a

Bob Patel

I Well, your past, for at control Thanks mean the well. has is focus Vincent. I'm the run said asset will, the the been the you really And really of proud to reliability which I've and refinery. as if our improve controllables, question, in team

XXXX. delivered performance. great ourselves wanted I position for IMO to think We they've really

we that so runway operate clear turnaround done capacity. have our work, at to we've a next think year completing for maximum I

generate continue the key focus cash want we I LyondellBasell. we're reinvest going to at The And the refinery the is, of moment terms But portfolio, in Vincent, turn get cash we'll profit, see to key to refinery -- can the over to to options generate And flow. flow is free that consider continue back to that. on we'll to time. focus into at free moment, the

Operator

comes our America. from And Byrne Bank Steve you. next of question from Thank

open. Your line is now

Steve Byrne

Bob. Hi.

in, to curious longer mechanical meaningful You to industry could years? term views model help contributors five recycling, and on your you and next of plastic motivation become business think do just these. the these your I'm really one both molecular or either develop talked your them recycling projects to a Is drive say, about

Bob Patel

morning, Steve. Good

of this First is undertake that important to loop. when we've we close think the all, what's really got I plastics debate

so the the waste recycling to mechanical recycling, have a is that chemical into leakage of Then view solutions, range as going and we're prevent objective. my we've collected need We to first when environment of on. plastics that

platform is long-term. both to indeed and sustainable yes, ambition and in platform have mechanical chemical our in have the business And so, a a recycling areas over

scalable. to expect platform difference in where I other I see how there. of like here in recycling. takes us a path and draw chemical little it We is mechanical long just to any -- the returns have very we do that's wouldn't both be We're a that would to terms to for a in that Where committed will success investment. longer And timeline perhaps earn I

Operator

And next from Markets. our you. from Thank comes Viswanathan question Arun Capital RBC

is line Your open. now

Arun Viswanathan

Great. Good polyethylene. is morning. My question Thanks. on

prices Thanks. or some outlook And of looking usual down Do see drivers December just evolution $X.XX on understand thoughts I So if get to why? your polyethylene in expect industry wanted And kind the on if to so form not or a There would was that per are seasonality? you potentially in you come increase pricing? was quarter able price What through here. the next to two? get help September. that you that sticking you're at the to

Bob Patel

Okay.

of I backdrop. Arun you the somewhat And we showed our the So net market the that change first start slides in through the end in with We've Recent that U.S. industry reports prepared come down seen destocking. remarks price balanced. even the in quarter, third is that the are indicated markets have zero of amount PE reasonable indicates so have to me inventories

quarter So the because the of not like downstream that feels factors are the that confidence. of of created backdrop excess the all lot going of there's into factors to fourth macro have us lack inventory a --

we at $XXX ton. levels point very spreads. the Also back if years per levels this look on of last currently to when are to PE naphtha that get Asia I around the mentioned over And trough to naphtha you low these spreads XX PE Asia are kind

adjustments year But of, I trough, pricing destocking seasonal at some don't think extraordinary because reached to have naphtha about if we've this whether could you sort look you some we yes, Asia. in So the quarter. spread we every evidence of fourth expect PE changes like conditions in or do

And XX I years. if you over think that's one look the that's held back through last

see And we'll a once then demand that's typically we the happens things. do about in I'm year. continued thinking into every the how get growth kind that of next So months And will recall season, year year spring the nine anyone in year. we like of growth first the

should time So into get XXXX. the by the into we feel start we of to demand spring the growth impact going

point already constructive because in think of ways of spread. And a I I evidence Asia I'm terms to correction all the is naphtha inventories margins. So quite in at some quite PE and to the would we've had this

Operator

And McNulty comes question Markets. from John you. Capital BMO Thank next our from

is now line open. Your

Bhavesh Lodaya

Bhavesh is Lodaya Hi. Good This morning, Bob. John. for

Bob Patel

Good morning.

Bhavesh Lodaya

going Can you On goalpost everything you the additional region? according you what investments tracking you the ahead? of Chinese terms in there there. JV comfortable plan to with share as are making Bora, And in gets is it more what go appears

Bob Patel

few Well, there's JV. factors a Bora the especially with

of our First it's they construction costs what be would Coast. Gulf technology. And are half on of polyolefin the the based all, almost on

factors. So important The is XX% those construction are two really now. about complete

equity agreements have time, So at even startup. going we the by point a we're and be the closer contribute venture, to into where to definitive we're it'll more

us return you denominator and about costs those of equation the the factors will. all and give good confidence if So the

China. It's produced product for that's in China

region and the so a in and will our our able look grow very should test in a ahead to market. good and that large invest important are ability phases And to with JV confidence place And we in there case the market. be presence be build capability product. very when I locally position we're our for that we to future Bora growing our other investments us as very think this it's So confident about a

when the us factors all confidence we in venture So Bora. that conclude those are give the investment our with joint of

Operator

Fermium next Research. our question And comes you. from Frank from Thank Mitsch

Your line is now open.

Frank Mitsch

best Thomas Hey, future. was Thank certainly nice you for morning. you the with the you. wish to work and Good it

Thomas Aebischer

Thank you, Frank.

Frank Mitsch

impact consumer Bob, has your there four that LTM negative a looked kind in of activity I&D you four being economic I how guess and of a level part side Or level on about had billion. I&D? row is as base the I&D with pace what to you've as about industrial that $X.X I thinking said this the year-over-year of that I business, or can quarters of been of And row? earnings at business? do be base respect as of has comps in down kind quarters on the either is Is EBITDA should think you at that the of we anything had the this offer

Bob Patel

the that as considerably has you those the the so weakened provides land of where the and know that evolving how about is methanol. business it's I&D I&D value in kind there and indication demand the And that's you now. been styrene upside. value we has when this That's have And chain. of are an when takes Well, chains Frank think styrene as of we portfolio part puts not on the

automotive. PO throughout a well That's weaker bit has year. a as been of well. has methanol been because the And as weakened consistent story

oxyfuel a been Now all has that of business. bitter offsetting

U.S. better So cheaper not had only this the butane especially we've blend premiums in but also year,

if find all So is I&D, have that mean, it's other trough this to conditions. Frank really the they're unusual them Not one If better correlated there for I because you offsets. look of whole we doing are but portfolio at were typically that doesn't.

think So exact part at but our and difficult has you provides styrene of methanol. point an corrected that about to portfolio considerably when upside number, really the

Operator

Thank our next Ahmed from you. question Alembic And comes Global. from Hassan

is Your line now open.

Hassan Ahmed

Good morning, Bob.

Bob Patel

Good morning.

Hassan Ahmed

a you How would case sort made be us will headwind? thinking the of around XXXX? polyethylene Any clear potentially things? sort from over Bob, supply/demand of polypropylene thoughts give be margins here. on of also us lot tailwind most additions thinking good. are should things Could that could your sort views cycle pretty side And ethylene I there? and capacity how I discussion you about are mean, your about that a we you've think a up behind be around of of

Bob Patel

Hassan. Sure,

year. that, some next go kind of that's our sense we up there new is So, But is starting capacity sideways. polypropylene, on

capacity, this be capacity polypropylene likely, grows And demand We the in pretty strong. been As new could rates improvement will absorbed. those automotive sector. by be have an bolstered think growth

today, -- PE. factor a today's weak the PP so on probably or more we seen market, saw benefit have big in back see impact than 'XX, that 'XX sector this economics as a it XX likely this over saw back, well. margins years in that the and the PP demand. which We comes And last automotive will And We burst 'XX. you has in automotive when in include really very

go from I So, demand, net 'XX. supply kind think sideways 'XX we of maybe better of more to

Operator

And from UBS. Thank you. Roberts our from next John question comes

line open. now Your is

John Roberts

Thomas. best as well and wishes Thank you,

Thomas Aebischer

John. Thanks,

John Roberts

There's underperformed the and significantly exposed more relatively U.S.? about I because polypropylene. different little durables assume, it Europe polyethylene discussion than its was

Bob Patel

No.

is polypropylene that recall There -- is regional there's some You'll market. really it's a of market. more a but of regional global trade, more generally

because similar. our performance that and been than weaker. Europe where the in here. it harder sector Europe little And in bit has see has automotive business, demand hit Europe better are So, we probably more U.S. in frankly, compounding is terms much a U.S. of

prior capacity year a see So, demand decent sort I year of a the has additions sort been question, that growth I of performance of to as us. polypropylene and sideways this this showing business mentioned in And net from next. for

Operator

question Wells from from you. our Mike Thank next comes Sison Fargo. And

is line Your now open.

Mike Sison

you talked of and think when seasonal kind of Bob, third sort sequentially. fourth normal quarter. your nice about guys, fourth quarter, quarter are lot for the quarter a dire of outlook companies outlook about you versus decline more seeing Hey sort much of

So, is markets sequential you're polyethylene or weaker seeing either in different there decline? that of other a anything not sort your

Bob Patel

go destocking our That think causing of come lot the year. to weakness downstream. QX markets of Well, I whole if recession the new capacity seen trade expectations a caused and sort fears all I has to you destocking throughout mean, we've down. uncertainty, back in QX, pricing already of

a so, of And is you of see into but fourth my go in because typically, some lot polyethylene. that's year-end, occurred you already sense destocking quarter, especially when

naphtha to really Asia the trough would again, conditions. showing it's I I to spread. PE And mean you point

of weaker has the of most expectation for has behavior. year this around has this markets been and sentiment buyer been driven So and there

get to a seasonal imagine So, difficult other year, than that it's some impacts more. be directionally every we lot a would there

Thomas Aebischer

the that I XXXX you very it weak, quarter to be Mike, was easy easy And so -- fourth of comp. would beat should remind fairly that

Operator

Thank from JPMorgan. Jeff next Zekauskas question you. from comes our And

open. now is line Your

Jeff Zekauskas

Thanks very much.

think growing globally years, it's rate I or four, do polyethylene past has in five the grown Over think pretty close XXXX? what to it grew you At X%.

Bob Patel

probably seen more Again, as has kind mentioned in polyethylene the Jeff bit I this and destocking X% described. and like demand And its with growing growth, trade So, in concerns on, X.X% think of it's little to but use lot we've of a the lower. little demand. maybe packaging around earlier timeframe a happening that range, still you end globally year, in this consumable bit based, a grown and so reduction I so --

on constructive growth demand very still we're So going forward. polyethylene about

Thomas Aebischer

sort readjusted America. exports that it's because got tariffs. up at end all to year We're this increased things see after hard going out North to I of the to after have from especially polyethylene trade ended the think lanes where the the

Operator

Thank you. comes And Jim SunTrust. next from Sheehan from our question

now open. line is Your

Jim Sheehan

morning, Bob. Good

share where be a and trade plastic to I'm something if objected conflict? how the trying that, You for repurchases for all you to using interest projects a said stakeholder the use maximizing Related wanted on longer commitment comment the to in you in with else, another and of a might just to fit earlier conventional cash you you value conflict to Could would that not would cash serve timelines might just on understand hierarchy shareholders recently of stakeholder for which example, For instead association waste projects. priorities. shareholders? with you return interest shareholders. please situation the that than signed stakeholders, address to resolve how for

Bob Patel

to that that that model. stakeholders, the responsible our flow have business earn sustainability earn have it, good so a results, our be how not on and to Indeed. we with Well, but deploy cash is generates the flow. actually we it in do what And emphasize we do we only we're I cash how that going think concern can disciplined we we aim

that mind the keeping it's done results stakeholders all generate we've in cash important And and in do that that we so the stakeholders in we all frankly, that deploy deploy I way I mind. And keeping we flow would frame think it that.

this know don't that approach. commitment change requires I new our So a in

in really I to the it company think in to long the idea living been time. future. by a and continue the share over strong period to that this repurchases past, relates we'll of have we've is And do as a

shareholders And we important And where very constituency. so in we're to prudent invest. a very going are be stakeholder

Operator

Thank you. Bernstein. next And from our from question Jonas comes Oxgaard

now is open. line Your

Jonas Oxgaard

squeezing Thank you here. for me in

about what it's talking Could is export. of of you what exported PE on get going little increasing realizations talk now kind bit about price your volumes? percentage You're and a where you those

Bob Patel

low our of Jonas about up That's actually exported. So XX% is PE today come from digits. double

next I exports. And year but of further be mid-XXs, of under and more we the into we increase likely XX% can next imagine to that Hyperzone a bit that of little our XX% will something the in out So I we've after like average exports start industry still approach We'll that as we approach already export think U.S. that, year. go increased

Operator

next [Operator from Laurence comes Instructions] Our Alexander question from Jefferies.

now open. is line Your

Laurence Alexander

Good morning.

might move like get your order mix On initial buy say to from companies your to portfolio thoughts about you the provide your using willing to above investment and of of discussion recyclable willingness to circularity years some in in you let the products over XX% total a example time. sustainability terms could shift would think certain be bionaphtha Europe, CapEx over And other to time? in in next you XX you for circularity look willingness to help what

Bob Patel

Yeah.

end that, naphtha, on based is of going investment site. as bio our time we've demonstrated we on to that scale technology, and aim our that we're Laurence – scale crack sustainable So, then investment this get and is company I don't in find chemical can return earn of to industry, to And based and And our been we have it's up. that over more we'll of I'm the feedstock think convinced ability already evolve Germany front so that we availability recycling and sources on our our We're sort we recycling, the business good see models returns. nature can any we I of to of first very sort And differently. of mechanical innovate,

of will plastic plastics term. endeavoring that that different use use waste we as like Then of again, will at to And think in important as And perhaps little loop. long to environment. mentioned regard. today us prevent to fully to the the waste once the we'll and the it's horizon. modest We longer is are right we investments in new welcome committed we I'm very very think we're that circularity. I the companies the have But ways this we or at able continue products into close time most be while that earlier important plastic many are to comparative a time pallets collect very that, to going about into create scale of and the up we the point, the adoption to leakage prepared invest

Operator

our from Tudor Holt. you. question Blair Pickering Thank And last from Matthew comes

is now open.\ line Your

Matthew Blair

for Hey, question. Thanks Bob. taking my

for demand-side crude grows. can you thought weakened lighter this more about how There's crude. it So curve as on worried Do And PE? for if U.S. that that forward from your to pricing production side a the PE this? you cost – to has going shale what's and so may as weaker? potential affect and come naphtha the generally Are supply year or shift either relative a getting soften the naphtha feedstocks maybe from would pricing view that crackers

Bob Patel

Hey, good question. Matthew, morning, good

refining refinery. So part Obviously, lot there go it's because have discounts. to at sustained. refinery, cheaper. these a from propylene If of affects crude it are performances. a at naphtha that be European Having relative as further further benefit the that, a products we're always lot. where, what's to said oil, don't become is if our there come that is And would – naphtha a that's that in when if some the will that historical And come-off of point and already in back hard I We there offsets. imagine and premiums of naphtha does naphtha would so I kind frankly, price think rightly ailing all or operations like reduction you down results others naphtha's quite our directionally mentioned to

ethane naphtha, the We in also could was compared here to U.S. crack more advantaged it if

the they're down step we'll there's a and think difficult in it that. naphtha more to to me contemplate. – is of way I mean, of that sort to I two naphtha terms seems sustained in our sides So But through have to ledger work

Operator

turn And you. back And meeting I over that the Thank Kinney. will final David question. was Mr. our to

Bob Patel

offer This is I'll you. remarks. closing Bob Patel. a Thank few

questions. First of for thanks great all all, the

performance to disciplined our is our we're market simply company flow, demand. during increase value make markets to these LyondellBasell, further more times uncertainty, At waiting and for taking steps investment cash of and for resilient rebound. not delivering industrial macro Our decisions weak shareholders. We're headwinds create

you Thank growth Hope on that, you your earnings weekend. look we'll to interest year you forward for our our in Thank call. With results call. updating and we full you. our a company the quarter end during and fourth all great initiatives have

Operator

disconnect for conference. you at participation parties may in All today's this your Thank time.

LyondellBasell Industries (LYB) 1 Nov 192019 Q3 Earnings call transcript