EBITDA: $1.1 billion, $1.2 billion excluding identified items
LyondellBasell Industries announced net income for the third quarter 2022 of $572 million, or $1.75 per share. Third quarter 2022 EBITDA was $1.1 billion, or $1.2 billion excluding identified items. During the quarter, the company recognized identified items of $70 million, net of tax, related to the costs incurred in connection with exiting the refining business that impacted earnings by $0.21 per share.
"LyondellBasell's high cash conversion and strong balance sheet enable our company to confidently navigate challenging markets while continuing to prioritize returns for our shareholders," said Peter Vanacker, LyondellBasell Chief Executive Officer.
During the third quarter, higher energy costs, new supply and weaker markets pressured global petrochemical margins. Global demand for LyondellBasell's products utilized in consumer packaging remained stable, but demand from durable goods markets softened. In Europe, olefins, polyolefins and intermediate chemicals markets encountered significantly higher energy costs and weak demand. In response to these challenging conditions, the company postponed the restart of its ethylene cracker in France until the first quarter 2023 and reduced operating rates across its global asset base to match lower demand. In China, markets remained weak due to zero-COVID measures and tepid growth. In North America, new supply and inventory destocking led to declines in polyolefins prices. The impacts of higher energy, raw material, labor and transportation costs were also visible in Advanced Polymers Solutions results. LyondellBasell's oxyfuels and refining businesses continued to earn margins above historical averages. The company proactively managed working capital and optimized asset utilization to deliver high cash conversion and provide strong shareholder returns.
LyondellBasell generated $1.4 billion in cash from operating activities during the quarter. The company remains committed to a disciplined approach to capital allocation. In the third quarter, approximately $440 million was reinvested in the businesses and more than $550 million was returned to shareholders through the quarterly dividend and share repurchases.
"In September, we made changes to our organizational structure and Executive Committee, which includes a new Circular and Low Carbon Solutions business unit to accelerate our leadership in sustainability and serve growing customer demand for our Circulen products. These strategic decisions helped set the foundation to drive our value enhancement program, which we expect will generate $750 million in recurring annual EBITDA improvement by the end of 2025. We are positioning our organization to advance our strategic initiatives while enhancing our focus on value and agility," said Vanacker.
"LyondellBasell's diverse business portfolio, commercial agility, robust balance sheet and strong liquidity equip our company to navigate difficult environments. With cost discipline in our DNA, we are increasing our focus on enhancing value through the cycle and remain committed to strong shareholder returns," said Vanacker.
In October, demand from consumer packaging, oxyfuels and refining markets remains strong. Nonetheless, persistent inflation and high energy costs coupled with weaker seasonal demand are likely to drive further margin compression across most of the company's businesses in the fourth quarter. Challenging conditions are expected to continue in European and Asian markets. To match the global demand outlook, LyondellBasell expects fourth quarter average operating rates of 75% for Olefins & Polyolefins Americas assets, 60% for Olefins & Polyolefins Europe assets and 75% for Intermediates & Derivatives assets. The company remains watchful for market improvements in China.
"Our new organizational structure and value creation initiatives are well-timed to address current market conditions. These actions are only the beginning of LyondellBasell's journey to increase our focus on value, agility and accountability through continuous improvement. We will continue to share more information in the coming quarters and provide more clarity and focus around LyondellBasell's North Star strategy development," said Vanacker.
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