On March 14th, LyondellBasell held a Capital Markets Day at the New York Stock Exchange (Capital Markets
Day) activities, and released a new long-term strategy for the company. The strategy is aligned with LyondellBasell’s purpose of creating solutions for everyday sustainable living. LyondellBasell expects to accelerate growth, expand margins and improve returns through its technology leadership, sustainable solutions and strong focus on strong positions in attractive global markets. LyondellBasell is positioning itself as the company of choice for financially, environmentally, socially and governance (ESG) conscious investors, customers and brand owners. LyondellBasell is meeting demand by adapting its business to use plastic waste as a valuable carbon source and creating products and sustainable solutions from circular and renewable materials.
LyondellBasell’s new strategy focuses on driving sustainable value and consists of three key elements:
1. Develop and upgrade core businesses: Focus growth on LyondellBasell’s leading businesses in expanding and competitive markets.
2. Build a profitable Circular & Low Carbon Solutions business (Circular & Low Carbon Solutions, CLCS):
LyondellBasell expects the incremental earnings before interest, taxes, depreciation and amortization (EBITDA) of the CLCS business to grow to at least US$1 billion by 2030, leveraging the company’s existing scale, market access and technology leadership to gain Substantial returns.
3. Strengthen performance and culture: LyondellBasell will drive performance improvement by shifting from a single cost control to a more comprehensive value creation and customer focus.
Value Enhancement Program (Value Enhancement Program,
VEP) will help LyondellBasell’s new strategy. The program is expected to result in at least $750 million of recurring annual EBITDA improvement by the end of 2025. VEP expands production capacity through low-cost debottlenecking and improves reliability, reduces costs and emissions through energy conservation, and increases profits through improved procurement, logistics and customer service.
LyondellBasell CEO Peter Vanacker
Said at the meeting, “Our products are an important part of safe, healthy and more sustainable living, and I believe the new strategy will unlock the true potential of LyondellBasell. What makes this strategy different is that we have The ability to effectively execute these three influential elements simultaneously. Execution will be driven by our passionate people, as will our technical leadership, superior cash generation and strong balance sheet. Trust LyondellBasel We have enduring strengths in our core business, which we will build on through highly focused and prudent reinvestment. This will deliver strong profit growth and strong returns for our shareholders.”
While announcing the new strategy, LyondellBasell has taken the following actions around its new strategy starting in 2022:
☑ Resolutely withdraw from the oil refining business and divest the Australian polypropylene business;
☑ Further enhance customer focus by building customer and commercial excellence teams;
☑ Establish CLCS leadership roles and operations;
☑ Implement and expand VEP;
☑ Significant steps have been taken on the road to reducing greenhouse gas emissions.
While LyondellBasell intends to end refining operations at its Houston refinery, the company is evaluating future investments in the facility. LyondellBasell is analyzing the potential for retrofitting the refinery to establish a CLCS business, which would also preserve jobs in the region and align with the company’s strategy to leverage existing assets in strategic positions in the portfolio.
At the same time, LyondellBasell also announced that it will explore strategic options for its ethylene oxide and derivatives (EO&D) business in the US Gulf region. While the EO&D business provides positive cash income, it is not a business in which the company seeks a long-term leadership position. The decision is yet another example of how the new strategy is sharply focused on the core business.
LyondellBasell aims to unlock value through a new long-term direction, grow earnings and continue to deliver strong returns to investors. LyondellBasell seeks to build a business with enduring competitive advantages, with a greater focus on leadership, strengthening its position as the supplier of choice to customers and positioning the company as a profitable leader in the growing circular and low-carbon solutions market.
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