LyondellBasell Industries

Hello, and welcome to the Lyondell Bissell Teleconference. At the request of Lyondell Bissell, this conference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question and answer session. I would now like to turn the call over to Mr. David Kinney, Head of Investor Relations. Sir, you may begin.

Thank you, Operator. Before we begin the discussion, I would like to point out that a slide presentation accompanies today's call and is available on our website at www.lyondellbussell.com slash investor relations. Today, we will be discussing our business results while making reference to some forward-looking statements and non-GAAP financial measures. We believe the forward-looking statements are based upon reasonable assumptions and the alternative measures are useful to investors. Nonetheless, the forward-looking statements are subject to significant risk and uncertainty. We encourage you to learn more about the factors that can lead our actual results to differ by reviewing the cautionary statements in the presentation slides and our regulatory filings, which are also available on our investor relations website. Comments made on this call will be in regard to our underlying business results using non-GAAP financial measures such as EBITDA and earnings per share excluding identified items. Additional documents on our investor website provide reconciliations of non-GAAP financial measures to GAAP financial measures. together with other disclosures, including the earnings release and our business results discussion. A recording of this call will be available by telephone beginning at 1 p.m. Eastern time today until March 2nd by calling 877-660-6853 in the United States and 201-612-7415 outside the United States. The access code for both numbers is 137-420-56. Joining today's call will be Peter Vaneker, Lined-Up Sales Chief Executive Officer, our CFO, Michael McMurray, Ken Lane, our Executive Vice President of Global Olefins and Polyolefins, Kim Foley, our EVP of Intermediates and Derivatives and Refining, and Torkel Rehmann, our EVP of Advanced Polymer Solutions. During today's call, we will focus on fourth quarter and full year 2023 results, including an update on LIB's strategic progress. We will also discuss current market dynamics and our near-term outlook. With that being said, I would now like to turn the call over to Peter.

Thank you, Dave, and welcome to all of you. We appreciate you joining us today as we discuss our fourth quarter and full year 2023 results. Let's begin, as we always do, with our safety results on slide three. During 2023, our employees and contractors demonstrated their commitment to outstanding safety performance. LYB's total recordable injury rate was 0.14, which is approximately 20% lower than the average of the prior three years. I want to congratulate our APS segments where injuries were 38% lower than 2022, a significant improvement from historical levels. We always use safety performance as a leading indicator of operational excellence and business performance. But there is no greater value than seeing every member of our team return home to their families every day in the same health as when they began their working day. Let's now turn to slide four to discuss our financial results. 2023 was another challenging year for petrochemicals. While energy prices moderated in an environment of geopolitical unrest, markets were extremely cautious due to uncertainty about inflation and the potential for a more pronounced downturn in economic activity. Reported GDP growth in the US and China improved relative to 2022, the growth in petrochemicals was far below norms for our industry. Against that backdrop, LYB delivered earnings of $8.65 per share, with an EBITDA of $5.2 billion. Cash generation was exceptional and resulted in $4.9 billion of cash from operations, with a highly efficient cash conversion ratio of 98%. We ended the year with $7.6 billion of liquidity supported by a strong investment grade balance sheet. And we exceeded our cost of capital with an 11% return on invested capital. In March of last year, we successfully launched our new strategy at our capital markets day in New York. Now let's turn to slide five and briefly review this strategy. Our goal was to create focus, clarity, and alignments about the direction Linder Basel would be moving over the next five years and provide a clear vision of what the company would look like in 2027. Our strategy is built around three pillars, growing and upgrading the core, building a profitable circular and low-carbon solutions business, and stepping up performance and culture. In growing and upgrading the core, we are investing in businesses that fit with our competitive advantages and long-term strategy. Our circular and low-carbon solutions business is driving leadership in circularity and addressing the massive demand for these products from our customers and society. In the third pillar, we are transforming the culture of LYB to embed a more comprehensive view of value creation while continuing to recognize that stringent cost management is vital in our industry. On slide six, we highlight our progress on our strategy in 2023 and the work underway over the next few years towards our 2027 goals. In just 10 months since launching our strategy last March, Linder Basel has unlocked nearly one-third of the $3 billion of incremental normalized EBITDA that we are targeting for 2027. The successful startup of the POTBA plant this year is a major step forward in growing and upgrading our core by adding approximately $450 million to our normalized EBITDA. and I am very pleased to report that our value enhancement program is far exceeding our initial expectations. In 2023, the VEP achieved a year-end run rate of more than $400 million of mid-cycle recurring annual EBITDA improvements. And Michael will share more details on the progress of the VEP in a few moments. As shown on the slide, we have numerous work streams underway to build toward our strategic goals of $2 billion of incremental normalized EBITDA by 2025 and a total of $3 billion by 2027. With the announced sale of the ethylene oxide and derivatives business to INEOS for $700 million, we are redirecting resources away from non-core businesses. The deal we announced in January to acquire 35% of NETPET in Saudi Arabia for approximately $500 million is just one example of how we are growing our core cost-advantaged olefins and polyolefins businesses. We're making great strides in building strong foundations for our circular and low-carbon solutions business. In 2023, we took a final investment decision for our first tranche of advanced recycling capacity in Germany, using our proprietary catalytic moray tech technology. And we are building partnerships to source waste plastic to supply our app in Germany, while also securing waste plastic in Houston to supply our next investment in advanced recycling capacity. And the VEP program is not a one-time initiative. Michael will describe our increased targets for 2024 and beyond. While we have a lot of work ahead of us, I want to congratulate our team on the substantial progress we achieved on our strategic journey in 2023, ensuring a robust platform for longer-term value creation and positive leverage to any market turnarounds. On slide seven, let's take a look at the steps ahead to deliver on our goals. We will continue to grow and upgrade our core businesses by focusing on advantaged feedstocks in growing markets where LYB can build or extend our leading market position. Our new joint venture in Saudi Arabia is one example of how we will do this. As we add new positions, we will continue to review our portfolio for businesses and assets that are not aligned with our long-term strategy. The divestiture of EO and derivatives business, the sale of our Australian polypropylene business, the shutdown of a polypropylene line in Italy, and the exit of the refining business are all examples of how we are sharpening the focus of our business portfolio. The rapid progress of the LYB Value Enhancement Program also contributes to our growth through low-cost capacity de-bottlenecks and productivity improvements. We're making good progress on building the foundations for our circular and low-carbon solutions business as we work towards our goal of $500 million of incremental EBITDA by 2027 and $1 billion by 2030. And our VEP is not only delivering growth and productivity. The VEP also supports the third pillar of our strategy to step up performance and culture by instilling a value-based mindset across the company. We have numerous initiatives to improve margins through customer and commercial excellence embedded in the VEP. And our work to transform our advanced polymer solutions business is also an important part of our work to step up performance and culture. All of our progress is supported by our foundations of efficient cash generation, disciplined capital allocation, and our investment grade balance sheet. We're leveraging partnerships where it fits to achieve growth with capital efficiency, and we're pursuing a very value-focused investment program. And we remain steadfast in our support for a secure, competitive, and growing dividend as part of our commitment to competitive shareholder returns. And now I will turn the call over to Michael to discuss the details of our financial progress.