Quite Possibly the Busiest Chemical Company on the Planet. It’S a Bold Claim – ‘Quite Possibly the Busiest Chemical Company on the Planet.’
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2010 ANNUAL REPORT Quite possibly the busiest chemical company on the planet. It’s a bold claim – ‘Quite possibly the busiest chemical company on the planet.’ Let’s consider the facts. In 2010, LyondellBasell completed its restructuring, secured $8.9 billion in exit financing, and established itself as a public company with a successful listing on the New York Stock Exchange (NYSE). New, world class facilities began production in Germany, China and Thailand. A renewed commitment to operating excellence enabled our company to set production records at 60 percent of our plants around the globe. While achieving these results, we improved our safety performance and continued to implement disciplined cost controls. 2010 EBITDA totaled $4 billion, significantly more than anticipated and $1.8 billion greater than 2009. Led by a new Board of Directors and new management team, both chosen for their proven abilities and industry experience, our employees worked to create a culture that champions and rewards high performance. Even so, we know good is not great. Our sights are set on becoming a truly great and enduring enterprise. Looking ahead, we see a bright future. We enjoy an advantaged ethane feedstock position in the U.S. and have taken steps to increase our ethane use and availability. We have improvements underway at locations like the Houston refinery and are debottlenecking other assets to give us an opportunity to grow our capacity. Our balance sheet is strong, and we are on track to optimize our financial structure for the long run. We have demonstrated a significant ability to generate cash and earnings and have regained trade credit. We repaid $1.2 billion in debt in the fourth quarter and still our liquidity remained at $6.1 billion with a year-end cash balance of $4.2 billion. Last year we also restructured numerous sales contracts, enhanced our operating flexibility, and improved energy efficiency. We invested in our internal capabilities—moving from multiple systems to a single global SAP system. We have streamlined our workforce and continue to optimize to improve efficiency. So, how are we positioned for the future? We believe our efforts will continue to be rewarded in a strengthening market. The solid foundation we’ve built, when combined with our people, assets and technology is leverage for the future. Our aim in 2011 will be to build upon and accelerate our successes in a few key focus areas including: • Intensifying our focus on safety, reliability and costs, • Completing major turnarounds at the Houston refinery and one of our Channelview olefins plants, • Building on our 2010 SAP system consolidation, and • Further optimizing our capital structure. We sincerely appreciate the dedication and contributions of our employees. Their hard work in 2010 gives us tremendous cause for optimism about the coming year. We pledge to continue to work together to maintain our focus on operating excellence and to strengthen our portfolio for the benefit of you, our owners and stakeholders. Thank you for your continued support of LyondellBasell. The best is still ahead. James L. Gallogly, Chief Executive Officer Highlights of consolidated financial statements U.S. $ IN MILLIONS Jan.-April 2010 May-Dec. 2010 Combined 2010 2009 Sales and other operating revenues $13,467 $27,684 $41,151 $30,828 Operating income 690 2,254 2,944 317 Income from equity investments 84 86 170 (181) Net income* 8,564 1,587 10,151 (2,865) Diluted earnings per share (U.S. dollars)** NA 2.78 NA NA Diluted share count (millions) NA 566 NA NA EBITDA 1,088 2,947 4,035 2,236 Cash flow from operations (936) 2,957 2,021 (787) Capital expenditures 226 466 692 779 * Net income attributable to the Company; includes income from continuing and discontinued operations. ** EPS from continued and discontinued operations. 2010 Performance Annual EBITDA EBITDA by segment Net debt 2008-2010 $5,000 2,000 1,750 $4,000 5,000 1,500 1,250 4,000 $3,000 1,000 3,000 $2,000 $, millions 750 $, millions 2,000 $, millions 500 $1,000 1,000 250 0 0 0 2008 2009 2010 April 30 2Q10 3Q10 4Q10 EAI (Emergence) Americas Derivatives Technology Intermediates & Intermediates Refining & Oxyfuels Olefins & Polyolefins - Olefins & Polyolefins - We have included certain financial information for the full year 2010. For financial accounting purposes, periods on and before April 30, 2010 represent a different entity than for periods after our emergence from bankruptcy on that date. We have combined the two entities’ results for certain disclosures in this presentation; the combined information is considered non-GAAP because it combines two entities whose results are not accounted for in the same manner. We also use EBITDA in this presentation, which is a non-GAAP measure. Our calculations of EBITDA may not be the same as similarly titled measures by other companies. Reconciliations of the non-GAAP measures we have used in this report can be found on our website at www.lyondellbasell.com/InvestorRelations. LyondellBasell Portfolio LyondellBasell has a balanced, integrated product portfolio comprising five major business segments: Olefins and Polyolefins—Americas, Olefins and Polyolefins—Europe, Asia and International (EAI), Intermediates and Derivatives, Refining and Oxyfuels, and Technology. Each plays a strategic role in creating stakeholder value. Olefins and Polyolefins Intermediates and Derivatives Americas Financials ($ in millions) Financials ($ in millions) Revenue: $12,589 Revenue: $5,574 EBITDA: $1,685 EBITDA: $851 CapEx: $198 CapEx: $85 EAI Financials ($ in millions) Revenue: $12,834 Global capacity positions EBITDA: $818 High purity isobutylene 1st CapEx: $207 Propylene oxide 2nd Acetyls 4th Global Capacity Positions Polypropylene 1st Key Products Polypropylene compounds 1st Polyethylene 4th Propylene oxide (PO) Propylene 4th Propylene glycol Ethylene 5th Propylene glycol ethers Butanediol Key Products Styrene monomer Isobutylene Ethylene Benzene Catalloy process Tertiary butyl hydroperoxide Propylene Polyethylene resins Acetyls Butadiene Polypropylene PB-1 resins Ethylene oxide 2010 Summary 2010 was a tremendous year for both O&P – Americas and 2010 Summary O&P – EAI due in part to improved market conditions, a lighter PO and PO derivatives volumes and margins benefitted from strong feedstock slate in the Americas and improved olefins and durable goods demand and industry leading reliability. Increases in PO polyolefins volumes and margins in the EAI segment. co-product volumes coupled with a strong isobutylene market also contributed to a significant increase in segment profitability. Business Strengths • World’s largest producer of polypropylene and Business Strengths polypropylene compounds and a top worldwide producer • Second largest global producer of propylene oxide and one of ethylene, propylene and polyethylene. of the largest producers of styrene monomer, acetic acid • Differentiated product offerings from key building blocks and vinyl acetate monomer worldwide. for basic plastics to high-value specialty products such as • Proprietary PO and acetyls production process technologies Catalloy process resins and PB-1 allowing for very specific provide us with a cost advantaged position for these tailoring of product properties. products and their derivatives. • Large-scale operations and the operational flexibility to • Vertically integrated facilities with global reach benefit from use the lowest-cost raw materials provide competitive optimization opportunities across the entire value chain. advantages. • U.S. feedstock processing flexibility enables us to process End Uses advantaged NGL’s, particularly ethane. Insulation Cosmetics Automotive seating Cleaners End Uses Home furnishings Sports equipment Packaging Toys Paints and coatings Carpeting Beverage cups and bottles Pipes Adhesives and sealants and more... Wire and cable compounds Industrial and consumer Automotive components packaging Household appliances and more... Refining and Oxyfuels Technology Financials ($ in millions) Financials ($ in millions) Revenue: $15,069 Revenue: $510 EBITDA: $452 EBITDA: $212 CapEx: $157 CapEx: $31 Global Capacity Positions Global Capacity Positions Oxygenated fuels 1st Polypropylene catalysts 1st Refining capacity 373,000 (barrels per day) Key Products Key Products Gasoline Polyolefin catalysts Diesel fuel Polyolefin process technology licenses Heating oil Associated engineering and other services Jet fuel Petrochemical raw materials 2010 Summary Methyl tertiary butyl ether (MTBE) Ethyl tertiary butyl ether (ETBE) The year was characterized by strengthened catalyst sales while licensing activity remained subdued as anticipated. 2010 Summary Business Strengths Houston refinery results improved primarily due to improved U.S. refining margins, particularly for refiners with the ability to • Leading global provider of technology licenses and supplier process heavy crudes. The Berre refinery generated losses in an of catalysts for polyolefin production. environment characterized by weak European refining conditions • Technology platform that facilitates investments in high- and a French port strike. Oxyfuels results declined following a growth regions broadening our global reach. record year in 2009, as a result of lower margins. • A complete PE and PP technology portfolio enabling Business Strengths polyolefin manufacturers the choice of a single provider for polyolefin process technologies and catalyst systems. • Our Houston refinery, among North America’s largest full conversion refineries,