# LyondellBasell (LYB) Financial Model Free Excel 3-statement financial model and company analysis for LyondellBasell. - Canonical: https://finamodel.com/companies/lyondellbasell - Industry: Chemicals - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/LYB.xlsx ## Model Purpose This model evaluates LyondellBasell's equity valuation and cash flow generation capacity through a full-cycle petrochemical environment, specifically assessing the earnings impact of its Houston refinery closure in early 2025, the growth of its Circular and Low Carbon Solutions (CLCS), and its cyclical exposure to global feedstock spreads. ## Company Overview LyondellBasell Industries N.V. is a multinational chemical company and one of the world's largest producers of plastics, chemicals, and refining products. The company operates globally, converting raw materials like ethane, naphtha, and crude oil into essential petrochemical building blocks such as ethylene and propylene, which are then processed into polyolefins. Business segments include: * Olefins and Polyolefins - Americas (O&P-Americas) (approx. 30% of revenue) * Olefins and Polyolefins - Europe, Asia, International (O&P-EAI) (approx. 25% of revenue) * Intermediates and Derivatives (I&D) (approx. 25% of revenue) * Advanced Polymer Solutions (APS) (approx. 10% of revenue) * Refining (approx. 8% of revenue, ceasing operations in Q1 2025) * Technology (approx. 2% of revenue) The company operates an asset-heavy, highly cyclical business model that relies heavily on the cost advantage of US natural gas liquids (ethane) compared to global oil-based naphtha feedstocks. LyondellBasell holds a top-tier competitive position globally in polyethylene and polypropylene production. Recent major events include the strategic decision to permanently shutter its 268,000 barrel-per-day Houston oil refinery by the end of Q1 2025, a corporate Value Enhancement Program (VEP) targeting $1 billion in incremental EBITDA, and significant investments in its MoReTec chemical recycling facilities. ## Revenue Deep Dive ### Olefins and Polyolefins - Americas (O&P-Americas) * **Segment name:** Olefins and Polyolefins - Americas * **Revenue driver formula:** Ethylene and Polyethylene Sales Volume (million metric tons) x Average Realised Price per ton * **Historical growth rate:** Highly cyclical, ranging from -15% to +20% depending on commodity pricing * **Key growth levers and headwinds:** Driven by US domestic demand, export competitiveness, and the price spread between US ethane and global naphtha. * **Pricing dynamics:** Spot and contract pricing linked to global benchmark indices (e.g., CMAI). * **Revenue recognition notes:** Recognised upon transfer of control, typically at shipment. * **Seasonality:** Modestly weaker in Q4 due to customer destocking and winter weather disruptions. ### Olefins and Polyolefins - Europe, Asia, International (O&P-EAI) * **Segment name:** Olefins and Polyolefins - Europe, Asia, International * **Revenue driver formula:** Sales Volume (million metric tons) x Average Realised Price per ton * **Historical growth rate:** -10% to +10% (recently negative due to European industrial weakness) * **Key growth levers and headwinds:** Headwinds include high European energy costs, weak consumer confidence, and cheap imports from the US and Middle East. * **Pricing dynamics:** Spot and contract pricing, heavily influenced by Brent crude and naphtha prices. * **Revenue recognition notes:** Recognised upon shipment. * **Seasonality:** Q3 often impacted by European summer holidays; Q4 impacted by destocking. ### Intermediates and Derivatives (I&D) * **Segment name:** Intermediates and Derivatives * **Revenue driver formula:** Volume of Propylene Oxide, Styrene, and Oxyfuels x Product Price * **Historical growth rate:** -5% to +15% * **Key growth levers and headwinds:** Oxyfuels are driven by gasoline crack spreads and summer driving demand; Propylene Oxide is driven by durable goods and construction (polyurethanes). * **Pricing dynamics:** Contractual with raw material pass-through mechanisms and spot market exposure. * **Revenue recognition notes:** Standard shipment terms. * **Seasonality:** Oxyfuels peak in Q2 and Q3 during the Northern Hemisphere summer driving season. ### Advanced Polymer Solutions (APS) * **Segment name:** Advanced Polymer Solutions * **Revenue driver formula:** Compounding Volume x Price per ton * **Historical growth rate:** 2% to 5% (normalised) * **Key growth levers and headwinds:** Highly dependent on global automotive production and appliance manufacturing. * **Pricing dynamics:** Value-added pricing, less volatile than base commodities. * **Revenue recognition notes:** Standard shipment terms. * **Seasonality:** Follows automotive manufacturing schedules (dips in late summer and late December). ### Refining * **Segment name:** Refining * **Revenue driver formula:** Throughput Volume (barrels per day) x Refined Product Price * **Historical growth rate:** N/A (Business is being exited) * **Key growth levers and headwinds:** Historically driven by the Maya 2-1-1 crack spread and heavy crude discounts. * **Pricing dynamics:** Spot market commodity pricing. * **Revenue recognition notes:** Standard shipment terms. * **Seasonality:** N/A post-Q1 2025. ### Technology * **Segment name:** Technology * **Revenue driver formula:** Catalyst Sales Volume x Price + Licensing Fees * **Historical growth rate:** 3% to 6% * **Key growth levers and headwinds:** Driven by global petrochemical capacity additions. * **Pricing dynamics:** High-margin proprietary pricing. * **Revenue recognition notes:** Licensing revenue recognised over time or at a point in time depending on performance obligations. * **Seasonality:** Lumpy depending on the timing of new plant start-ups. ## Cost Structure ### Variable Costs / COGS * **Line-by-line breakdown:** Feedstock costs (ethane, propane, butane, naphtha, heavy crude oil), energy costs (natural gas, electricity), and direct manufacturing expenses. * **Gross margin range:** 10% to 18% (highly dependent on the cycle). * **Key input costs and commodity exposures:** US natural gas, NGLs (ethane), Brent crude, and European natural gas. * **How COGS scales with revenue:** Feedstock costs scale linearly with volume but fluctuate wildly with commodity prices, creating significant operating leverage when product prices rise faster than input costs. ### Operating Expenses * **R&D:** Approximately 0.3% to 0.5% of revenue, focused on catalyst development and Circular and Low Carbon Solutions (CLCS). * **SG&A:** Approximately 3% to 4% of revenue, primarily headcount-driven and corporate overhead. * **Depreciation & Amortisation:** Approximately 4% to 5% of revenue, reflecting the asset-heavy nature of petrochemical plants. * **Stock-Based Compensation:** Immaterial relative to revenue (less than 0.5%). * **Restructuring / one-time charges:** Frequent in recent years, including non-cash impairment charges (e.g., $769 million in O&P EAI in 2024) and refinery exit costs. ### Margin Profile * **Gross margin:** 10% to 18%. * **EBITDA margin:** 8% to 15% (recently compressed to the lower end due to global overcapacity). * **Operating margin:** 4% to 10%. * **Net margin:** 2% to 8%. * **Margin trend:** Compressing recently due to weak global demand and capacity additions in China, though the US business remains cost-advantaged. ## Balance Sheet Structure * **Total assets:** Approximately $34 billion to $36 billion. * **Key asset categories:** Property, Plant and Equipment (PP&E) dominates the balance sheet (approx. $15 billion), representing the massive chemical plants and crackers. * **Goodwill & intangibles:** Approximately 10% to 12% of total assets, stemming from historical acquisitions (e.g., A. Schulman). * **Working capital profile:** * **Days Sales Outstanding (DSO):** 35 to 45 days. * **Days Inventory Outstanding (DIO):** 45 to 55 days. * **Days Payable Outstanding (DPO):** 40 to 50 days. * **Net working capital as % of revenue:** 10% to 15%. * **Is working capital positive or negative?** Positive. The company requires significant working capital to fund inventory, especially when raw material prices rise. * **PP&E:** Consists of crackers, polymerisation plants, and the Houston refinery. Useful lives range from 15 to 30 years. * **Right-of-use assets / operating leases:** Approximately $1.5 billion, material but manageable. ## Capital Expenditure & Investment * **Capex as % of revenue:** 5% to 7% (historically $1.8 billion to $2.2 billion annually). * **Maintenance capex vs. growth capex:** Approximately 60% maintenance and turnaround costs, 40% growth and sustainability. * **Major capex programmes underway or planned:** MoReTec chemical recycling facilities in Germany, and conversion of the Houston refinery site into a circularity hub. * **Capitalised software / development costs:** Immaterial. * **M&A pattern:** Bolt-on acquirer and joint venture partner (e.g., Bora joint venture in China). * **Typical acquisition multiple paid:** 6x to 8x EBITDA for specialty compounding businesses. ## Debt & Capital Structure * **Total debt:** Approximately $11 billion to $12 billion. * **Debt/EBITDA ratio:** 2.0x to 3.0x (target is to maintain investment grade). * **Credit rating:** BBB (S&P) / Baa2 (Moody's). * **Key debt instruments:** Senior unsecured notes (guaranteed notes due 2031, 2035, 2036), commercial paper, and a senior revolving credit facility. * **Maturity profile:** Well-laddered with average maturity exceeding 8 years. * **Interest rate profile:** Predominantly fixed-rate bonds; weighted average cost of debt is approximately 4.5% to 5.5%. * **Covenants:** Standard investment-grade covenants (interest coverage and leverage maximums). * **Share repurchase programme:** Active but flexed based on cash flow (e.g., $201 million in 2025). * **Dividend policy:** Progressive dividend policy, yielding 6% to 7%, with an annual payout of approximately $5.00 to $5.40 per share. ## Cash Flow Characteristics * **Operating cash flow conversion:** Exceptionally strong, typically 90% to 95% of EBITDA. * **Free cash flow margin:** 4% to 8% depending on the cycle. * **Major non-cash items:** Depreciation, amortisation, and frequent non-cash asset impairments (e.g., European asset write-downs). * **Working capital cash flow impact:** Acts as a use of cash during commodity price upswings and a source of cash during downturns (e.g., $240 million net working capital release expected from the refinery closure). * **Capex intensity:** Moderate to high, requiring disciplined capital allocation. * **Cash tax rate vs. GAAP effective tax rate:** Cash tax rate is typically a few percentage points higher than the effective tax rate of approx. 20%. ## Sheet Structure 1. **Assumptions**: Hardcoded inputs for macro drivers (Brent crude, US natural gas, ethane prices), segment volume growth, pricing assumptions, and corporate tax/WACC rates. 2. **Revenue_Build**: Volume and price schedules for O&P-Americas, O&P-EAI, I&D, APS, Refining (zeroed out post-Q1 2025), and Technology. 3. **Income_Statement**: Consolidated view mirroring the 10-K, including Sales and other operating revenues, Cost of sales, SG&A, R&D, Operating income, Interest expense, and Net income. 4. **Segment_EBITDA**: Reconciliation of operating income to EBITDA for each of the six reporting segments. 5. **Balance_Sheet**: Standard assets, liabilities, and equity, balancing in every period. 6. **Cash_Flow**: Indirect method starting from Net Income, adding back D&A and impairments, adjusting for working capital, and deducting capex and dividends. 7. **Working_Capital**: Schedules for Accounts Receivable, Inventory, and Accounts Payable driven by DSO, DIO, and DPO. 8. **Debt_Schedule**: Roll-forward of commercial paper, term loans, and senior notes, calculating interest expense based on average balances. 9. **PP&E_and_Capex**: Roll-forward of gross PP&E, accumulated depreciation, and capex split by maintenance and growth. 10. **DCF_Valuation**: Unlevered free cash flow calculation, WACC build, terminal value, and implied share price. ## Key Financial Relationships 1. O&P Americas Revenue = O&P Americas Volume x O&P Americas Average Realised Price 2. Refining Revenue = Refining Throughput Volume x Average Refined Product Price (Note: Volume must equal 0 after Q1 2025) 3. Cost of Sales = Feedstock Volume x Feedstock Price + Variable Manufacturing Costs + Fixed Manufacturing Costs 4. Segment EBITDA = Segment Revenue - Segment Cost of Sales - Segment SG&A + Equity Income from Joint Ventures 5. Consolidated EBITDA = Sum of Segment EBITDAs - Corporate/Unallocated Expenses 6. Depreciation Expense = Beginning Net PP&E x Blended Depreciation Rate 7. Interest Expense = Average Total Debt x Weighted Average Interest Rate 8. Accounts Receivable = (Consolidated Revenue / 365) x DSO 9. Inventory = (Cost of Sales / 365) x DIO 10. Accounts Payable = (Cost of Sales / 365) x DPO 11. Free Cash Flow = Cash from Operations - Capital Expenditures 12. Cash Conversion Ratio = Cash from Operations / EBITDA ## Cross-Sheet Dependencies * **Assumptions** feeds **Revenue_Build** and **Working_Capital**. * **Revenue_Build** feeds the top line of the **Income_Statement** and **Segment_EBITDA**. * **Income_Statement** generates Net Income, which is the starting point for the **Cash_Flow** sheet. * **Working_Capital** calculates the change in NWC, which feeds the **Cash_Flow** sheet. * **Cash_Flow** determines the ending cash balance and debt paydown capacity, feeding the **Balance_Sheet** and **Debt_Schedule**. * **Debt_Schedule** calculates interest expense, which loops back to the **Income_Statement**. (To avoid circularity, interest expense should be calculated on beginning debt balances or a circularity toggle must be implemented). * **PP&E_and_Capex** feeds D&A to the **Income_Statement** and **Cash_Flow** sheets, and ending PP&E to the **Balance_Sheet**. ## Sign Convention * **Revenue and Assets:** Positive. * **Expenses and Liabilities:** Positive on their supporting schedules, but subtracted in total calculations (e.g., Gross Profit = Revenue - Cost of Sales). * **Cash Flow Statement:** Inflows are positive; outflows (like Capex, Dividends, and Debt Repayment) are negative. * **Contra-asset accounts:** Accumulated depreciation is entered as a positive number but subtracted from Gross PP&E to yield Net PP&E. ## Things Most Likely to Go Wrong * Failing to zero out the Refining segment's revenue and operating costs after Q1 2025, which will artificially inflate future revenue projections. * Ignoring the specific cash impacts of the refinery closure in 2025, which includes approximately $345 million in cash costs offset by a $240 million net working capital release. * Applying a generic gross margin percentage rather than modelling the specific spread between product prices and feedstock costs (the US ethane advantage). * Overestimating O&P EAI margins by ignoring the structural energy cost disadvantages currently impacting European petrochemical assets. * Forgetting to include equity income from joint ventures in the EBITDA calculation, which is a material contributor for LyondellBasell. * Miscalculating cash conversion by failing to exclude non-cash impairment charges (which have been frequent and large, such as the $769 million charge in 2024) from the EBITDA denominator. * Modelling capital expenditures too low; the company requires heavy maintenance capex to run its crackers safely. * Assuming constant share counts without accounting for the company's active share repurchase programme. ## Validation Checks * Refining segment revenue and throughput must equal exactly zero from Q2 2025 onwards. * Consolidated cash conversion (Operating Cash Flow / EBITDA) should consistently track near 90% to 95%. * Capex as a percentage of revenue should remain in the 5% to 7% band. * The Balance Sheet must balance: Total Assets = Total Liabilities + Shareholders' Equity in every forecasted period. * Net Debt / EBITDA should remain between 2.0x and 3.0x to align with management's investment-grade targets. * Effective tax rate should hover around 20%; flag if it deviates by more than 200 basis points. * Dividend payout must be fully covered by Free Cash Flow; flag if FCF falls below the total annual dividend outlay of approximately $1.7 billion. ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | O&P Americas Volume Growth | 1.5 | % | Modest growth aligned with US GDP and export demand | | O&P EAI Volume Growth | 0.5 | % | Stagnant European industrial demand | | I&D Volume Growth | 2.0 | % | Steady demand for polyurethanes and oxyfuels | | APS Volume Growth | 2.5 | % | Recovery in automotive build rates | | Refining Throughput (Post Q1 2025) | 0 | bpd | Houston refinery permanently closes | | Consolidated Gross Margin | 12.0 | % | Reflects current mid-cycle petrochemical spreads | | SG&A as % of Revenue | 3.5 | % | Historical average | | R&D as % of Revenue | 0.4 | % | Historical average | | Effective Tax Rate | 20.0 | % | Management guidance and historical average | | DSO (Days Sales Outstanding) | 40 | Days | Based on recent working capital metrics | | DIO (Days Inventory Outstanding) | 50 | Days | Based on recent working capital metrics | | DPO (Days Payable Outstanding) | 45 | Days | Based on recent working capital metrics | | Capex as % of Revenue | 6.0 | % | Blended rate of maintenance and MoReTec growth capex | | Weighted Average Interest Rate | 5.0 | % | Based on current debt stack and recent issuances | | Annual Dividend per Share | 5.40 | $ | Reflects current progressive dividend policy | | Share Repurchases | 200 | $ Millions | Conservative baseline based on 2025 actuals | | WACC | 9.5 | % | Standard discount rate for cyclical chemical peers | | Terminal Growth Rate | 1.5 | % | Long-term inflation and GDP proxy | ## Data Sources & Benchmarks * **Filings:** SEC EDGAR (LyondellBasell Industries N.V. Form 10-K, 10-Q, 8-K), and the LyondellBasell Investor Relations website. * **Peers for Benchmarking:** Dow Inc. (DOW), Westlake Corporation (WLK), Eastman Chemical (EMN), and INEOS (private). * **Industry Data Sources:** CMAI (Chemical Market Associates, Inc.) / IHS Markit for global ethylene, propylene, and polymer pricing and margins; EIA (Energy Information Administration) for US natural gas and ethane inventory data. * **Consensus Estimates:** Bloomberg or FactSet for forward-looking EBITDA and EPS consensus. * **Proprietary Data:** ICIS pricing reports for spot chemical margins and European naphtha spreads. ## Sources * LyondellBasell 2024 and 2025 Form 10-K Filings (SEC EDGAR) * LyondellBasell Q4 2024 and Q4 2025 Earnings Releases * LyondellBasell 2024 Sustainability Report * Reuters and Industry Press regarding the Houston Refinery Closure (January 2025) * LyondellBasell 2023 Capital Markets Day Presentations (for VEP and CLCS targets) --- ## Frequently asked questions ### What does LyondellBasell do? LyondellBasell is a global multinational chemical company and one of the world's largest producers of plastics, chemicals, and refining products. It converts raw materials like ethane and crude oil into essential petrochemical building blocks such as ethylene and propylene, which are then processed into polyolefins. ### What are the main revenue drivers for LyondellBasell? LyondellBasell's revenue is primarily driven by its asset-heavy operations, leveraging the cost advantage of US natural gas liquids compared to global oil-based feedstocks. The company's performance is also significantly influenced by cyclical global feedstock spreads and the growth of its Circular and Low Carbon Solutions (CLCS) segment. ### What is LyondellBasell's typical capital expenditure as a percentage of revenue? LyondellBasell historically allocates 5% to 7% of its revenue towards capital expenditures, which translates to approximately $1.8 billion to $2.2 billion annually. This spending is roughly 60% for maintenance and turnaround costs and 40% for growth and sustainability projects, including new chemical recycling facilities. ### What key factors are considered when valuing LyondellBasell's equity? When evaluating LyondellBasell's equity valuation and cash flow generation, key factors include its performance through a full-cycle petrochemical environment. The model specifically assesses the earnings impact of its Houston refinery closure, the growth of its Circular and Low Carbon Solutions, and its cyclical exposure to global feedstock spreads. ### Can I download an Excel financial model for LyondellBasell? Yes, an Excel financial model for LyondellBasell (LYB) is available for download. This general corporate model provides a forecast horizon from FY2026 to FY2030, allowing for detailed analysis of the company's future financial performance. ### What is the assumed revenue growth rate in the LyondellBasell financial model? The financial model for LyondellBasell assumes a revenue growth rate of approximately -0.42% over the forecast horizon. This reflects the company's cyclical business environment and strategic adjustments, including the impact of its Houston refinery ceasing operations. [Interactive forecast calculator](https://finamodel.com/companies/lyondellbasell/forecast)