Lyondellbasell Industries Nv · NYSE:LYB
Lyondellbasell Industries Nv — 4th Annual Morgan Stanley Global Chemicals & Agriculture Conference 2015
34 slides from Lyondellbasell Industries Nv's conference presentation, Nov 9, 2015
Slide 1: Morgan Stanley Chemicals and Agriculture Conference
Morgan Stanley Chemicals and Agriculture Conference Doug Pike VP, Investor Relations November 9-10, 2015
Slide 2: Cautionary Statement
Cautionary Statement The statements in this presentation relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant ris
Slide 3: Continuation of Record Earnings During 2015
Continuation of Record Earnings During 2015 EBITDA Diluted Earnings Per Share ($ in millions) (1) (1) As Reported Excluding LCM As Reported Excluding LCM $9,000 $12 8,000 10 7,000 6,000 8 5,000 6 4,000 3,000 4 2,000 2 1,000 2011 2012 2013 2014 Q3'15 LTM 2011 2012 2013 2014 Q3'15 LTM LTM EBITDA of $8
Slide 4: A High Performing Portfolio: EBITDA Across Time
A High Performing Portfolio: EBITDA Across Time Olefins & Polyolefins - Americas Olefins & Polyolefins - EAI USD, millions USD, millions $5,000 $2,000 As Reported Excluding LCM As Reported Excluding LCM 4,000 1,500 3,000 1,000 2,000 500 1,000 2011 2012 2013 2014 Q3'15 LTM 2011 2012 2013 2014 Q3'15 L
Slide 5: Portfolio Stability
Portfolio Stability Portfolio % at 2014 Examples Characteristics EBITDA 100% Ethylene (naphtha) Naphtha-based ethylene production: currently 90% Cyclical PE – Blow molding the highest cost feedstock PP – Homopolymer Dependent on the cyclicality of industry 80% supply/demand Refining 70%
Slide 6: LYB Portfolio and Economic Sensitivity: End-Use Markets Generate Volumetric Stability
LYB Portfolio and Economic Sensitivity: LYB End-Use Markets Generate Volumetric Stability Durable / Non-Durable Revenue(1) World PE and PP Demand B Lbs 200 PP PE 150 Durable 100 Non-Durable ’90 – ’14 CAGR: 50 PE: 4.4% PP: 6.6% 0 1990 1994 1998 2002 2006 2010 2014 Revenue by End Use(1) 20% PE Year-on
Slide 7: Industry Leading Cash Returns to Shareholders
Industry Leading Cash Returns to Shareholders 2011 - Q3'15 Shareholder Returns of Capital as % of Average Q3'15 Enterprise Value Regular Dividend Special Dividend Share Repurchase Free Cash Flow 60% 50% 43% 37% 40% 30% 25% 18% 20% 19% 17% 20% 11% 12% 10% 11% 9% 8% 10% 7% 0% LYB A B C D E F Peer Comp
Slide 8: Each Business is Operated to Maximize Results
Each Business is Operated to Maximize Results Q3’15 LTM EBITDA Segment LYB Market Position Priority (ex. LCM) Olefins & Polyolefins – NGL advantage Invest $4.3 B Americas Increasing capacity Commodities – naphtha based, Olefins & Polyolefins – with cyclical upside Optimize $1.8 B EAI Advanta
Slide 9: O&P - Americas and EAI Our Strategy is Generating Differential Results
O&P - Americas and EAI Our Strategy is Generating Differential Results O&P Americas vs. Americas Peers EBITDA excluding LCM per Pound of Ethylene Capacity ¢ / lb Safe & Reliable Operations 40 LYB O&P Americas 30 20 Peer Avg Cost Focused 10 2011 2012 2013 2014 Q3'15 LTM O&P EAI vs. EAI Peers Fe
Slide 10: Differentiation within the Portfolio Likely Exceeds Perceptions
Differentiation within the Portfolio Likely Exceeds Perceptions Portfolio Stability, EBITDA Indexed to 2012 O&P – Americas Average margin above benchmark, ¢/lb 2012 2013 2014 3Q'15 LTM 12 160% 10 8 140% 6 4 120% 2 0 100% 2011 2014 2011 2014 Polyethylene Polypropylene 80% O&P - EAI Average margin abo
Slide 11: Shale Advantage: Healthy Oil to Gas Ratio
Shale Advantage: Healthy Oil to Gas Ratio Historic Oil/Gas Ratio 60x 50x 40x Current: 20x 30x 20x 10x ’99 – ’09 Average: 8.5x 0x Current oil to gas ratio remains healthy and well above the pre-shale average 11
Slide 12: Global Ethylene Supply/Demand Outlook
Global Ethylene Supply/Demand Outlook Billion Lbs. Capacity Demand Effective Operating Rate 500 100% Forecast 95% 450 90% 85% 400 80% 350 75% 70% 300 65% 60% 250 55% 200 50% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Industry operating rates in 2016 are forecast to be very similar to 2
Slide 13: Naphtha Remains the Global Ethylene Price Setter
O&P - Americas and EAI Naphtha Remains the Global Ethylene Price Setter Industry Feedstock Mix by Region Ethylene Cost Curve @ $100 Brent @ $50 Brent Gas-based Cost of Ethylene Production Global Naphtha 50-60 ¢/lb Middle East North America Middle East Ethane Crackers 3-6 ¢/lb Global Naphtha 20-30 ¢/
Slide 14: O&P – EAI EBITDA Profile
O&P – EAI EBITDA Profile Indexed O&P EAI EBITDA Scenarios(1) (EBITDA Indexed, Mid-Cycle = 1.0) 2.0 Commodity Stable/Specialty Historic Performance Recent Performance Products Businesses 1.5 EU Olefins Catalloy 1.0 EU Polyethylene Polybutene-1 0.5 EU Polypropylene PP compounds Joint Ventures Trough M
Slide 15: European LYB Olefins Differential Performance
O&P – EAI European LYB Olefins Differential Performance Western Europe Olefins Operating Rate LYB Advantaged Raw Materials 100% 100% ~21 % pts. 50% 70% 0% 2010 2011 2012 2013 2014 Q3'15 2010 Q3'15 LTM LTM EU Industry LYB Advantaged Feedstock Naphtha LYB continues capturing value through: – Above i
Slide 16: I&D Segment Diversity: a Platform for Stable Profitability
I&D Segment Diversity: a Platform for Stable Profitability Differentiated Proprietary Technology Propylene Glycol Raw Material Margin (2014 EBITDA) ¢ / lb 45 Cyclical 30 U.S. Shale 15 Differentiated / Stable 0 2010 2011 2012 2013 2014 Q3'15 YTD Diverse End Uses(1) Contracting Strategy(1) Packaging C
Slide 17: LYB Practices the Leading Technologies
I&D LYB Practices the Leading Technologies Global PO Capacity(1) PO Cost Curve LYB LYB Processes Cost of PO Production ($70 Brent) Shell, Huntsman, BASF, Chlorohydrin & others POSM Non Co-Product Technologies Dow PO/TBA China Total Global Capacity: ~21 B Lbs. 15% 35% 50% LYB’s PO production capaci
Slide 18: Refining Response to Market Trends
Refining Response to Market Trends Market Trends Response Canadian heavy crude and U.S. crude Focusing on operations oil growth provide an advantage for U.S. – Expanding operating windows (more sulfur refiners capacity, increased light ends recovery) Growing supplies of heavy Latin – Capital a
Slide 19: We are expanding our advantaged positions significantly
We are expanding our advantaged positions significantly U.S. Ethylene Propylene Oxide ~45% Complete MM Lbs. MM Lbs. 14,000 4,000 12,000 3,500 ~ 25% 3,000 ~ 35% 10,000 2,500 8,000 2,000 6,000 1,500 4,000 1,000 2,000 500 - - Before After Before After Methanol MTBE Equivalent Complete MBPD MM Gal. Per
Slide 20: Outperformance coupled with a shareholder friendly approach
Outperformance coupled with a shareholder friendly approach Diluted Earnings Per Share Free Cash Flow per share $ millions $12 $6,000 As Reported Excluding LCM 10 5,000 8 4,000 6 3,000 4 2,000 2 1,000 2011 2012 2013 2014 Q3'15 LTM 2011 2012 2013 2014 Q3'15 LTM Dividends and Share Repurchases Multipl
Slide 21: Appendix
lyondellbasell Appendix THE RIGHT PIECES IN THE RIGHT PLACES
Slide 22: Cash Deployment Hierarchy
Cash Deployment Hierarchy 2014 Comments Base Capex ~ $700 million First priorities for cash Interest Expense ~ $350 million Foundation Fund through the cycle with Interim Dividend ~ $1.4 billion cash flow from operations High-return in advantaged Growth Capex ~ $800 million businesses Discreti
Slide 23: Status of Growth Projects
Status of Growth Projects Potential EBITDA(1) ($ million / year) Scope Cost 2011-14 Q2’15 YTD Project Start-up (million Lbs.) ($ million) Avg. Margins Margins Increase Ethane Capability 500 2012 ~$25 $80 – 100 $30 – 50 Midwest Ethylene / PE 120 2012 ~$25 $30 – 40 $20 – 30 EU Butadiene Expansion(2) 1
Slide 24: Glossary
Glossary CAGR: Compounded Annual Growth Rate COGS: Cost of Goods Sold D&A: Depreciation and Amortization EBITDA (as used for peers): Earnings before Interest, Taxes and Depreciation and Amortization = Revenue - COGS - SG&A - R&D + D&A + Equity Income EV: Enterprise Value calculated using t
Slide 25: Information Related to Financial Measures
Information Related to Financial Measures This presentation makes reference to certain “non-GAAP” financial measures as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. The non-GAAP measures we have presented include income from continuing operations excluding LCM, di
Slide 26: EBITDA Excluding LCM Adjustments
EBITDA Excluding LCM Adjustments 2011 - 2014 Reconciliation of EBITDA Excluding LCM Adjustments to EBITDA - 2011 Through 2014 For the Twelve Months Ended December 31, Incremental Change In Million of Dollars 2011 2012 2013 2014 from 2011 EBITDA Excluding LCM Adjustments: Olefins & Polyolefins - Amer
Slide 27: Net Income to EBITDA
Net Income to EBITDA 2011 - 2014 Reconciliation of Net Income to EBITDA For the Twelve Months Ended December 31, In Million of Dollars 2011 2012 2013 2014 Net Income $ 2,140 $ 2,834 $ 3,853 $ 4,168 (Income) Loss from Discontinued Operations 332 24 7 4 LCM Adjustments, After Tax - - - 483 Income from
Slide 28: Last Twelve Months EBITDA Excluding LCM Adjustments to Reported EBITDA
Last Twelve Months EBITDA Excluding LCM Adjustments to Reported EBITDA Reconciliation of EBITDA Excluding LCM Adjustments to EBITDA Last Twelve Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended Months March 31, June 30, S eptember 30, December 31, March 31, June 30, S eptembe
Slide 29: Last Twelve Months Net Income to EBITDA; Diluted EPS Excluding LCM
Last Twelve Months Net Income to EBITDA Diluted EPS Excluding LCM to Diluted EPS Reconciliation of Net Income To EBITDA Last Twelve Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended Months March 31, June 30, S eptember 30, December 31, March 31 June 30, S eptember 30, S eptem
Slide 30: Diluted EPS from Continuing Operations ex. LCM
Diluted EPS from Continuing Operations ex. LCM to Diluted EPS from Continuing Operations Reconciliation of Diluted EPS from Continuing Operations Excluding LCM Adjustments to Diluted EPS from Continuing Operations For the Twelve Months Ended December 31, 2011 2012 2013 2014 Diluted Earnings Per Shar
Slide 31: Free Cash Flow as a Percent of EBITDA
Free Cash Flow as a Percent of EBITDA Reconciliation of Free Cash Flow as a Percent of EBITDA - 2011 Through 2014 For the Years Ended December 31, Average In Million of Dollars 2011 2012 2013 2014 2011 - 2014 Net Cash Provided by Operating Activities $ 2,860 $ 4,787 $ 4,835 $ 6,048 $ 4,633 Less: Cap
Slide 32: Free Cash Flow to Net Cash Provided by Operating Activities
Free Cash Flow to Net Cash Provided by Operating Activities Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities For the Year Last Twelve For the Years Ended December 31, Three Months Ended Three Months Ended Ended Nine Months Ended Months March 31, June 30, S eptember 30, M
Slide 33: EBITDA per Pound of Ethylene Capacity
EBITDA per Pound of Ethylene Capacity Reconciliation of EBITDA Excluding LCM per Pound of Ethylene Capacity For the Years Ended December 31, Q3'15 In Million of Dollars Unless Otherwise Indicated 2011 2012 2013 2014 LTM EBITDA Excluding LCM: O&P–Americas $ 2,137 $ 2,968 $ 3,573 $ 4,190 $ 4,261 O&P–E
Slide 34: LYB Enterprise Value to EBITDA
LYB Enterprise Value to EBITDA Calculation of Ratio of LYB Enterprise Value (EV) to EBITDA Excluding LCM In Million of Dollars except for common shares outstanding Common Shares Outstanding, September 30, 2015 452,844,958 Multiplied by: Average Daily Closing Share Price, LTM September 30, 2015 $ 90.