01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V. is a global, independent chemical company that participates across the petrochemical value chain through six reportable segments: O&P—Americas, O&P—EAI, Intermediates and Derivatives (I&D), Advanced Polymer Solutions (APS), Refining (Houston refinery), and Technology.
The filing describes 2021 as a year of robust demand and tight market conditions. Sales and other operating revenues rose to $46.17 billiona from $27.75 billion in 2020, operating income rose to $6.77 billion from $1.56 billion, and net income was $5.62 billion versus $1.43 billion. Operating cash flow was $7.70 billion, capital expenditures were $1.96 billion, and dividends paid totaled $1.49 billion.
The company reduced long-term debt by $4 billionb in 2021 and states it does not plan further long-term debt reduction in 2022. The Refining segment remained weak, with an EBITDA loss of $624 million, which included a $624 million non-cash impairment of the Houston refinery in the fourth quarter. The company is weighing strategic options for the refinery, including a potential sale.
The company also expects 2022 capital expenditures of approximately $2.1 billionc, with the PO/TBA plant in Houston expected to start up at the end of 2022 at a total capital cost of approximately $3.4 billion. The filing notes that costs for that project are expected to rise by roughly 40% to 50% above the original estimate due to COVID-19 delays, more extensive civil construction and tariffs.
Risks highlighted include commodity price volatility, cyclical oversupply in chemicals and refining, environmental and climate regulation, and pending environmental enforcement matters, none of which the filing describes as material to the financial statements. The company also reports a pension deficit of $1,015 milliond and that it is in compliance with its debt covenants.
02—Key points
Key Highlights
- Net income rose to $5.62 billion in 2021 from $1.43 billion in 2020, on revenue of $46.17 billion versus $27.75 billion.
- Operating income increased to $6.77 billion from $1.56 billion, with O&P—Americas contributing a $3.38 billion increase.
- Long-term debt was reduced by $4 billion during 2021, and the company does not plan further long-term debt reduction in 2022.
- Refining segment EBITDA was a loss of $624 million, including a $624 million non-cash impairment of the Houston refinery; the company is weighing strategic options, including a potential sale.
- Shareholder returns in 2021 included $1.49 billion in dividends paid and $477 million in share repurchases of 5.2 million shares.
- 2022 capital expenditures are planned at approximately $2.1 billion, and the Houston PO/TBA plant is expected to start up at the end of 2022 with total capital expenditures of approximately $3.4 billion.
- Cash and short-term investments totaled $1.48 billion at year-end 2021, against total debt of $11.61 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, LyondellBasell Industries kept $0.12.
- Revenue$46.17B100.0%
- Cost of revenue−$37.40B81.0%
- Gross profit$8.78B19.0%
- Operating costs−$2.00B4.3%
- Operating income$6.77B14.7%
- Interest, other & tax−$1.16B2.5%
- Net income$5.62B12.2%
Where FY2021 revenue went
$46.17B- Cost of revenue: $37.40B, 81% of revenue
- Net income: $5.62B, 12% of revenue
- R&D: $124.0M, 0.3% of revenue
- SG&A: $1.25B, 2.7% of revenue
- Other operating costs: $624.0M, 1.4% of revenue
- Interest, other & tax: $1.16B, 2.5% of revenue
Kept 12% as net incomeNet income $5.62B · 12%R&D $124.0M · 0.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $46.17B$27.75B | +66.4% |
| Cost of Revenue | $37.40B$24.36B | +53.5% |
| Gross Profit | $8.78B$3.39B | +158.6% |
| R&D Expenses | $124.00M$113.00M | +9.7% |
| SG&A Expenses | $1.25B$1.14B | +10.1% |
| Operating Expenses | $39.40B$26.19B | +50.4% |
| Operating Income | $6.77B$1.56B | +334.4% |
| Interest Expense | $519.00M$526.00M | −1.3% |
| Net Income | $5.62B$1.43B | +293.6% |
| EPS (Basic) | $16.77$4.24 | +295.5% |
| EPS (Diluted) | $16.75$4.24 | +295.0% |
05—Questions
Frequently Asked Questions
How did LyondellBasell's profitability change in 2021?
Operating income increased to $6.77 billion in 2021 from $1.56 billion in 2020, and net income rose to $5.62 billion from $1.43 billion. The filing attributes the improvement largely to margin gains in O&P—Americas, O&P—EAI and I&D, driven by strong demand and tight market supply, with higher average sales prices tied to crude oil prices.
What is the status of the Houston refinery?
The Refining segment reported an EBITDA loss of $624 million in 2021. The company recognized a $624 million non-cash impairment on the Houston refinery in the fourth quarter of 2021. The company is weighing strategic options for the refinery, including a potential sale, subject to Board approval.
What are the company's capital allocation priorities?
The company states that it intends to continue paying quarterly dividends with the goal of increasing them over time, while maintaining a strong investment-grade balance sheet. In 2021 it paid $1.49 billion in dividends, repurchased 5.2 million shares for $477 million, and reduced long-term debt by $4 billion. It expects 2022 capital expenditures of approximately $2.1 billion.
What major growth projects is the company pursuing?
The company is constructing a world-scale PO/TBA plant in Houston, expected to start up at the end of 2022 with total capital expenditures of approximately $3.4 billion. The filing states that higher costs from COVID-19 delays, more extensive civil construction and tariffs are expected to add approximately 40% to 50% to the original cost estimate. It also notes that a joint venture with Sinopec began production in January 2022.
What key risks does the filing highlight for investors?
The filing highlights the cyclicality of chemical and refining markets, volatility in feedstock and energy costs, competition from producers with lower-cost natural gas access, environmental and climate regulation, operational interruptions at facilities, and dependence on the Houston refinery for refining operations. It also cites a pension deficit of $1,015 million at year-end 2021.
06—Continue