01—Abstract
Summary
Summary of the 10-K filed February 23, 2023. Cited figures are marked; the original filing is the authoritative source.
LyondellBasell Industries N.V.
(LYB) reported 2022 results with sales and other operating revenues of $50.45 billiona, up from $46.17 billion in 2021, but operating income fell to $5.10 billion from $6.77 billion and net income declined to $3.89 billion from $5.62 billion. Management attributed the margin pressure to high and volatile energy and feedstock costs and reduced global demand, with O&P-Americas and O&P-EAI facing headwinds from weaker demand in Europe and Asia and global capacity additions. Refining and I&D were the bright spots: Refining EBITDA rose to $921 million from a $624 million loss in 2021, and I&D EBITDA rose to $1.87 billion from $1.38 billion, driven by oxyfuels margins.
Strategically, the company decided in April 2022 to exit the Houston refinery business, with closure expected by the end of 2023, and sold its Australian polypropylene business, which resulted in a $69 millionb impairment. The company also formed a circular and low carbon solutions business and began start-up of its PO/TBA plant in Houston, with start-up on track for the end of Q1 2023 and a total cost of approximately $3.7 billion. A value enhancement program is targeted to yield approximately $750 million of EBITDA by the end of 2025.
On cash and shareholder returns, operating cash flow was $6.12 billionc in 2022, capital expenditures were $1.89 billion, and the company returned $3.7 billion to shareholders through quarterly dividends, a $5.20 per share special dividend, and share repurchases. Total debt was $11.32 billion at year-end, with cash and cash equivalents of $2.15 billion, and the company stated it remains committed to a strong investment grade balance sheet.
02—Key points
Key Highlights
- Sales and other operating revenues rose to $50.45 billion in 2022 from $46.17 billion in 2021, while operating income declined to $5.10 billion from $6.77 billion.
- Net income was $3.89 billion in 2022 versus $5.62 billion in 2021, and diluted EPS from continuing operations was $11.83 versus $16.77.
- O&P-Americas EBITDA fell to $2.73 billion from $5.27 billion, and O&P-EAI EBITDA fell to $112 million from $1.75 billion, reflecting lower olefins and polyolefins margins and demand.
- Refining EBITDA swung to $921 million from a $624 million loss, and the company announced in April 2022 it will exit the refining business by closing the Houston refinery by the end of 2023.
- Operating cash flow was $6.12 billion, with $3.7 billion returned to shareholders through dividends, a $5.20 per share special dividend, and share repurchases.
- The PO/TBA plant in Houston, with a total cost of approximately $3.7 billion, was scheduled to start up at the end of Q1 2023.
- Total debt was $11.32 billion at December 31, 2022, against cash and cash equivalents of $2.15 billion, with $3.84 billion of total unused credit facility availability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, LyondellBasell Industries kept $0.08.
- Revenue$50.45B100.0%
- Cost of revenue−$43.85B86.9%
- Gross profit$6.60B13.1%
- Operating costs−$1.50B3.0%
- Operating income$5.10B10.1%
- Interest, other & tax−$1.21B2.4%
- Net income$3.89B7.7%
Where FY2022 revenue went
$50.45B- Cost of revenue: $43.85B, 87% of revenue
- Net income: $3.89B, 7.7% of revenue
- R&D: $124.0M, 0.2% of revenue
- SG&A: $1.31B, 2.6% of revenue
- Interest, other & tax: $1.21B, 2.4% of revenue
Kept 7.7% as net incomeNet income $3.89B · 7.7%R&D $124.0M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 23, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $50.45B$46.17B | +9.3% |
| Cost of Revenue | $43.85B$37.40B | +17.2% |
| Gross Profit | $6.60B$8.78B | −24.7% |
| R&D Expenses | $124.00M$124.00M | 0.0% |
| SG&A Expenses | $1.31B$1.25B | +4.4% |
| Operating Expenses | $45.35B$39.40B | +15.1% |
| Operating Income | $5.10B$6.77B | −24.7% |
| Interest Expense | $287.00M$519.00M | −44.7% |
| Net Income | $3.89B$5.62B | −30.8% |
| EPS (Basic) | $11.84$16.77 | −29.4% |
| EPS (Diluted) | $11.81$16.75 | −29.5% |
05—Questions
Frequently Asked Questions
Why did LyondellBasell's operating income decline in 2022 despite higher revenues?
Cost of sales rose $6.45 billion, or 17%, mainly due to higher feedstock and energy costs, while revenues increased $4.28 billion, or 9%, largely from higher average sales prices. Lower olefins and polyolefins margins, reduced demand, and increased global capacity weighed on O&P-Americas and O&P-EAI results, partly offset by gains in Refining and I&D.
What is the status of the Houston refinery exit?
In April 2022 the company decided to exit the refining business and cease operation of the Houston refinery no later than the end of 2023. The filing states that exiting refining is its best strategic and financial path forward and that the company will serve the fuels market in the interim. The exit resulted in $187 million of expense recognized in the filing and related asset retirement obligations of $249 million recorded in 2022.
How much did LyondellBasell return to shareholders and what is its dividend policy?
In 2022 the company returned approximately $3.7 billion to shareholders through quarterly dividends, a special dividend of $5.20 per share, and share repurchases. Common dividends paid totaled $3.25 billion, and $420 million was spent on share repurchases. The company intends to continue paying quarterly dividends with the goal of increasing the dividend over time, subject to cash balances and expected results.
What capital spending does LyondellBasell plan for 2023?
The company plans to invest approximately $1.6 billion in capital expenditures in 2023, with about 70% allocated to sustaining maintenance and the remainder to profit-generating growth projects. Capital expenditures were $1.89 billion in 2022.
What does the company expect for market conditions in early 2023?
The filing states that challenging market conditions are expected to persist through the first half of 2023, though moderating energy and feedstock costs provide some offset to tepid global demand. The company expects first-quarter 2023 average utilization of 80% for its O&P-Americas, O&P-EAI and I&D segments and anticipates typical spring and summer seasonal demand improvements.
06—Continue